Gulf Energy Development Public Company Limited (SET: GULF) reported the financial results for Q2/23 with a total revenue of THB 35,263 million, a 44% increase from THB 24,553 million in Q2/22 and a core profit of THB 3,556 million, a 15% increase from THB 3,081 million in the same period of last year.
The growth was primarily driven by the revenue and profit recognition of Gulf Pluak Daeng (GPD), a 2,650-MW gas-fired IPP power project under IPD Group, of which the first unit with an installed capacity of 662.5 MW commenced commercial operation on 31 March 2023, resulting in a core profit of THB 223 million in Q2/23, along with the higher revenue from GMP Group’s 12 gas-fired SPPs due to higher electricity sales volume to EGAT with the average load factor increasing from 78% in Q2/22 to 80% in Q2/23, coupled with higher gross profit margin from electricity sales to industrial users due to the decline in average natural gas cost. The average gas cost fell from 449.15 THB/MMBtu in Q2/22 to 406.44 THB/MMBtu in Q2/23 (a decrease of 10% YoY), while the average Ft increased from 0.17 THB/kWh in Q2/22 to THB 1.12 THB/kWh in Q2/23.
In addition, GULF started to consolidate THCOM group’s revenue and profit to its consolidated financial statements from 1 January 2023 onward. In Q2/23, GULF recognized revenue of THB 639 million and profit of THB 116 million from THCOM. As of the end of Q2/23, 88 MW of the solar rooftop project under GULF1 was in operation, compared to 4 MW in Q2/22, resulting in a core profit of THB 48 million for this quarter.
In Q2/23, GULF reported a share of core profit from its associates and joint ventures of THB 2,153 million, a 6% increase from THB 2,035 million in the same period of the previous year. The growth was mainly driven by the share of core profit from INTUCH of THB 1,352 million, a 15% YoY increase from the stronger performance of AIS, as well as the recognition of the share of core profit from GJP group in the amount of THB 579 million, an increase of 6% YoY, from the 7 SPPs which recorded a higher gross margin as a result of a decrease in average natural gas cost and an increase in average Ft.
In addition, GULF recognized a share of core profit from 3 wind power projects under Gulf Gunkul Corporation totaling THB 148 million and a share of core profit from DIPWP, the gas-fired power plant in Oman, of THB 139 million in Q2/23. DIPWP has begun commercial operations, expanding from 52 MW in Q2/22 to 326 MW in Q2/23. GULF also recognized a share of core profit of THB 59 million from Thai Tank Terminal, a public terminal management project for handling liquid products. Nonetheless, these positive factors were partially offset by lower share of profit from the Borkum Riffgrund 2 (BKR2) offshore wind project in Germany following the divestment of 25.01% stake to the Keppel Group in December 2022.
In addition, the profit sharing from the PTTNGD project decreased as fuel oil price dropped at a faster rate than natural gas cost. This project’s revenue is linked to fuel oil price while cost is dependent on natural gas price. Moreover, the gas-fired Jackson Generation power plant in the United States reported a share of loss as a result of a drop in Henry Hub natural gas price to $1.99 /MMBtu in this quarter.
EBITDA for Q2/23 was THB 8,620 million, a 20% increase from THB 7,174 million in Q2/22. While the net profit attributable to the parent company, which takes into account the impact of the FX rate, was THB 2,885 million, an increase of 88% from THB 1,531 million in Q2/22 as a result of the Thai Baht’s depreciation against the US dollar from 34.26 THB/USD at the end of Q1/23 to 35.75 THB/USD at the end of Q2/23. Nonetheless, the recording of such transaction is an accounting transaction that does not have an impact on GULF’s cash flow and performance.
As of June 30, 2023, GULF reported a net interest-bearing debt to equity ratio of 1.76 times, up from 1.56 times as of December 31, 2022, due to the issuance of THB 20 billion debentures in March 2023, together with drawdown of loans from financial institutions to invest in GPD project.
Ms. Yupapin Wangviwat, Deputy Chief Executive Officer and Chief Financial Officer, GULF, revealed, “For 2023 performance, the total revenue is expected to increase by approximately 50% from the projects that are scheduled to commence commercial operation in second half of 2023. Mekong wind power project in Vietnam commenced commercial operation, amounting to a total of 128 MW, in July 2023. The second unit of GPD (662.5 MW) will commence operation on 1 October 2023.
In addition, GULF1’s solar rooftop projects are expected to gradually commence commercial operation of an additional 40-50 MW in 2023, amounting to a total of 130-140 MW. Furthermore, the trend of the lower natural gas cost will drive profit of SPPs. For the digital asset exchange business in Thailand under the joint investment of GULF Binance, the licenses to operate digital asset exchange and digital asset brokerage business have been granted from the Securities and Exchange Commission (SEC) and is scheduled to start trading by the end of this year.
The infrastructure projects in the pipeline are still on track, with the Map Ta Phut industrial port development phase 3 project’s land reclamation anticipated to be completed in 2024 and the construction of the LNG terminal will begin immediately after the completion of the land reclamation. The M6 and M81 intercity motorway projects are scheduled to commence operation in 2025, while the Laem Chabang port phase 3 project is expected to commence operation as planned. Lastly, the construction of the data center under digital business is expected to start in September of this year, with commercial operations commencing in 2025.
GULF is committed to achieve its decarbonization targets to reduce the carbon intensity by 25% by 2030 (compared to 2019) and increase renewable energy proportion in our portfolio by no less than 40% by 2035. GULF Group is currently developing several domestic renewable energy projects including solar farms, solar farms with battery energy storage systems, and wind farms.
In addition, GULF intends to expand its renewable energy businesses overseas, focusing on Europe, the United Kingdom, the United States, and Vietnam, through both greenfield investments and mergers & acquisitions. GULF believes that the company’s sustainable operations and compliance with international standards will enable it to achieve its decarbonization targets in the long term.”
