Electricity Generating Public Company Limited or EGCO Group reported its performance results for 2023, with total revenue of THB 56,983 million and operating profit of THB 8,734 million. The company booked net loss of THB 8,384 million, mainly due to an effect from the restructuring plan for the financial indebtedness and holding structure of joint ventures of Yunlin project. EGCO Group had a cash balance of THB 28,862 million at year end. The company’s Board of Directors will seek shareholders’ approval for a THB 3.25 per share dividend for the second half of 2023, which will bring the total dividend for the year to THB 6.50 per share representing a 5% dividend yield. This underscores the company’s strong cash flow and stable business and financial foundation.
Looking ahead, EGCO Group will further invest in both domestic and international markets. The company also emphasized its intention to achieve Yunlin construction completion by the end of 2024. Additionally, EGCO Group this year will recognize additional revenue from its US investments and is looking forward to a great opportunity for Quezon’s long-term power supply agreement which is under negotiation with a result expected in 2024.
Mr. Thepparat Theppitak, President of EGCO Group, explained that 2023 was a year full of challenges. Slow global economic recovery and tight financial policy had pressure on energy price and economic growth rate. Amidst such challenges, however, EGCO Group enjoyed continuous business growth. One of its key strategies is to invest in high quality projects through M&A which means immediate income recognition. In 2023, EGCO Group has successfully closed three investments in the US and Indonesia.
Major business achievements in the 2023 included the acquisition of a 49% stake in the US-based 609 MW RISEC power plant, the acquisition of a 50% interest in the US-based 1,304 MW Compass Portfolio, the acquisition of 30% stake in infrastructure and utility business CDI in Indonesia, the achievement of Yunlin’s initial electricity fed into the Taiwanese power grid and the commencement of commercial operations of APEX renewable projects.
2023 performance results were seen in THB 56,983 million total revenue and THB 8,734 million operating profit. Key contributors are the outstanding profits from Paju ES and Linden Cogen power plants, as well as the increasing electricity sales from BLCP power plant. EGCO Group, nevertheless, had THB 8,384 million net loss, mainly due to an effect from the restructuring plan for the financial indebtedness and holding structure of joint ventures of Yunlin project which is an accounting item that does not affect cash flow and financial covenant. EGCO Group had strong financial liquidity with THB 28,862 million cash and cash equivalents with a debt-to-equity ratio of 1.31 times.
Progress of Yunlin’s construction project, Yunlin offshore wind farm made impressive progress in 2023. By the end of the year a total of 45 monopiles were installed. The project has transmitted a green energy of 264 MW from 33 completed wind turbine generators to the grid. So far, the project’s average capacity factor is in excess of 40%, confirming its capability to generate future income.
During 2020-2021, the impact from COVID-19 is inevitable as the Taiwanese government enforced strict entry restriction and closed borders, which seriously affected travel and the transportation of large construction equipment. The construction area is located in the middle of the Taiwan Strait, an area prone to monsoons that limits for main installation work. Therefore, in 2023, all related parties have mutually agreed on the project’s advancement through a restructuring plan, including restructuring the financial indebtedness and holding structure. As a result, EGCO Group needed to recognize an effect from the restructuring plan for the financial indebtedness and holding structure and impairment loss on asset under construction, which is an accounting item that doesn’t affect cash flow.
The Yunlin project has been well prepared in all dimensions to complete the construction within 2024. The amended completion plan targets the installation of 80 wind turbines with total capacity of 640 MW during 2024.
Considering the company’s healthy business foundation and strong cash flow, the Board of Directors resolved at its meeting on 28 February 2024 to seek approval from the 2024 annual general shareholders’ meeting (AGM) to pay a dividend for the second half of 2023 of THB 3.25 per share. After the approval during AGM which is scheduled on 12 April 2024, EGCO Group’s total dividend payment for the entire year of 2023 will be THB 6.50 per share representing dividend yield of 5%.
2024 business direction: EGCO Group continues to seek new opportunities to invest in power plants and energy-related business under its “4S” strategy. The company has prepared THB 30 billion investment budget for this expansion. EGCO Group also set a goal to increase equity contracted capacity by another 1,000 MWe by focusing on acquiring and operating high quality gas-fired power facilities which support energy transition goals in their host power markets. The company has also expanded its renewable portfolio, backed by the advantage of its strong partners in eight countries where it operates, including Thailand, Lao PDR, the Philippines, Indonesia, Australia, South Korea, Taiwan, and the US. At the same time, EGCO Group has expected projects under construction to achieve the plan, and managed over 40 power plants in its portfolio as well as energy-related business to achieve maximum efficiency.
EGCO Group forecast that supporting factors in 2024 will be full-year revenue recognition from projects it has invested in 2023, namely RISEC, Compass Portfolio, infrastructure and utility business CDI, and the recognition of additional revenue from the commencement of commercial operation of the 74-MW EGCO Cogeneration Replacement power plant in Rayong province on 28 January 2024. EGCO Group has started commercial operations and sales of renewable power projects under APEX. In addition, the transmission to the grid by Yunlin, positive performance trend at Paju power plant, rising power demand in the US due to increasing economic growth, and the higher water levels at hydropower plants in Lao PDR that boost electricity generation capacity, will all contribute to revenue recognition this year.
For new investment opportunities in the near future, EGCO Group expects to complete additional M&A transactions within this year. Additionally, the company is looking forward to the opportunity for the extension of Quezon’s long-term power supply agreement which is expected in 2024.
