Krungsri Securities Steps Up EA’s TP to ฿63, Supported by Solid Wind Farm in 3Q18
EA’s 3Q18 is expected to grow from the stronger-than-expected wind power output.
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Krungsri Securities maintains OUTPERFORM rating for EA, and raised TP to ฿63 (from ฿60) after moving valuation base to FY19F. EA has the most attractive growth profile among renewable energy players.
 
EA has set up a joint venture in Singapore to develop a capacity of 20MW solar-plus-ESS plant in Con Dao Island in Vietnam. This will replace the diesel generators which power generating cost is high at over ฿10/kWh. Tariff rate would be Bt6-7/kWh, at 30-40% discount to current generation cost.
EA sees potential to develop up to 150-200MW of solar-plus-ESS generation capacity in Vietnam. There will likely be upside risk from the green biodiesel plant which should start operation in 3Q19. Key by-products could generate ฿500-550m annual profit based on the average selling price of US$3,000/ton, and 30% GPM.
 
The 3Q18F profit is expected to grow qoq and yoy to ฿1.05-1.10bln, led by stronger-than-expected wind power output. Output at 128MW Had Kanghan wind farm was solid at 48m units in July and 42m in August (vs total 48m in 2Q18), implying 49% capacity factor.
In energy storage (ES), construction of the 1GW ES plant will start this month, expecting COD to be in 4Q19, in line with Krungsri’s assumption. The other 49GW ES plants will be located in a new industrial estate (IE) in Chachoengsao to be jointly-developed by EA, FTI, and IEAT. They are currently converting the land to the industrial zone and securing EIA approval. These should be finalized by 3Q19 and relieve concerns over the location of the ES plants.
 