Gulf Energy Development Public Company Limited (SET: GULF), one of Thailand’s leading power producers, is set for significant growth despite a weaker-than-expected fourth-quarter performance, according to a research report by Kasikorn Securities (KSecurities). Analysts maintain a “BUY” rating with a target price of THB 64.50 per share, representing a 12.66% upside from the current price of THB 57.25.
4Q24 Profit Falls Short but Outlook Remains Strong
GULF reported a 4Q24 net profit of THB 3.9 billion, missing analyst estimates by THB 858 million due to lower-than-expected margins in its power business and foreign exchange losses. This marks a 18% year-over-year (YoY) decline and a 35% quarter-over-quarter (QoQ) drop.
However, core profit stood at THB 4.8 billion, down 13% YoY but up 1% QoQ, reflecting improved contributions from its independent power producer (IPP) segment, which saw an additional 1.3GW of capacity come online in the second half of 2024.
For 2025, KSecurities forecasts a core profit of THB 18.4 billion, a robust 18% increase YoY, driven by new power capacity, efficiency improvements, and business expansion.
Strategic Restructuring Unlocks Value
KSecurities stated that a key driver of GULF’s future growth lies in its corporate restructuring, particularly the creation of a new entity (NewCo) to consolidate its digital and infrastructure businesses.
- The restructuring will involve a 1:1 share swap, with GULF’s power, gas, and digital businesses forming part of NewCo, which is expected to be separately listed.
- The move is expected to unlock shareholder value by highlighting GULF’s diverse revenue streams beyond its core power operations.
The valuation of NewCo is estimated at THB 935.1 billion (THB 62.59 per share), reinforcing the upside potential for investors.
Aggressive Expansion in Power and Digital Sectors
Despite near-term earnings volatility, GULF remains one of the most promising energy stocks in Thailand, thanks to its aggressive expansion strategy. Key upcoming projects include:
- New power plants: A 377 MW facility in Rama II and a 295 MW solar farm, set to boost revenue from 2025 onwards.
- Digital Infrastructure: A 50 MW data center project, aligning with Thailand’s growing demand for cloud services and AI-driven computing power.
KSecurities highlights that GULF’s leverage remains manageable, with a Net Debt/Equity ratio at 0.8x in its power segment, ensuring financial flexibility to fund future growth.
While GULF’s short-term earnings may be under pressure from forex volatility and fluctuating margins, its long-term fundamentals remain intact. The company’s power business expansion, corporate restructuring, and digital infrastructure investments position it as a strong growth stock in Thailand’s energy and infrastructure sectors.
With a BUY recommendation and a 12.66% upside, KSecurities added that GULF remains an attractive option for investors seeking exposure to Thailand’s evolving energy landscape.
Meanwhile, Tisco Securities expected a pick up in first-quarter earnings for 2025, citing significant factors contributing to the upturn. These include the commencement of operations for the Hin Kong gas-fired IPP’s second unit with a 700MW capacity, as well as the launch of five solar projects totaling 295MW capacity. Furthermore, more favorable seasonal aspects for domestic IPP and the absence of scheduled maintenance at Jackson are expected to bolster performance. Despite concerns over the Global Minimum Tax’s impact on GULF, Tisco Securities foresees a limited adverse effect, with estimated annual repercussions of less than Bt1.0 billion.
The firm maintains a ‘Hold’ rating at a target price of THB 58.00 per share.
