During an analyst meeting, KGI Securities conveyed a slightly pessimistic outlook for BGRIM based on management’s revised target for new industrial user (IU) capacity in 2024, lowering it to 30-40MW compared to the earlier projection of 50-60MW.
Despite BGRIM’s anticipation of at least 40MW capacity from IU in 2025, the analyst attributes this conservative growth forecast to Thailand’s sluggish GDP expansion, leading to factory closures and delayed investments.
Notably, BGRIM is exploring potential utility sales to an upcoming data center, considering data centers as a long-term opportunity in Thailand pending government support.
KGI Securities anticipates weaker earnings for BGRIM in the second half of 2024 due to seasonal factors and decreased SPP margins, driven by escalated gas prices. The surge in Asia LNG JKM price to a year-to-date high at US$14.5/mmbtu has raised concerns about Thailand’s gas prices, with projections indicating an increase in SPP gas prices for 2025.
Consequently, the analyst has adjusted downward its forecasts based on reduced new IUs and higher gas prices. The revised estimates suggest an 8% to 4% year-on-year drop in core profits for 2024-25, before a potential 3% recovery in 2026.
Amidst market challenges and a cautious near-term outlook, KGI Securities has downgraded BGRIM’s rating from ‘Outperform’ to ‘Neutral’ and lowered the target price to Bt21.50 from Bt26.00.
While external factors like declining bond yields and currency exchange rates may offer trading opportunities, BGRIM is viewed as a beneficiary of declining gas prices and the influx of data centers in Thailand in the long run.
