ERC approves Ft increase for January-April 2023
Yesterday the ERC approved a further Ft hike of 0.9701 baht/KWh (to 1.9044 baht) for January-23 April, which was higher than market expectations for an increase of only 0.6488 baht /KWh in order to reduce the burden for the EGAT. LNG imports from the spot market. and industry This will increase the cost of electricity to 5.69 baht/KWh in January-April 2023 from 4.72 baht/KWh in September-December 2022, but will not affect the domestic sector. Electricity cost will remain at 4.72 baht/KWh. ERC has asked PTT to manage natural gas using cheaper gas prices from the Gulf of Thailand to support domestic electricity costs and using pool prices gas (from the Gulf of Thailand). Myanmar and LNG) for business and industry. In addition, the ERC asked PTT to help consumers by subsidizing the price of 1.5 billion baht per month for four months. (January-April) to help maintain electricity tariffs in the domestic sector.
BGRIM and JPIC will benefit the most.
The Ft increase will benefit most SPPs and solar installations with a Bt8/KWh adder. Industrial electricity users accounted for 18% of BGRIM’s revenue and 46% of JPIC’s revenue in 3Q. Our sensitivity analysis shows that each increase of 0.01 baht/KWh in Ft increases BGRIM’s net profit. increase by 23 million baht annually and that of JPIC has increased by 63 million baht annually, which means that BGRIM’s net profit will increase to 2.2 billion baht from 1.9 billion baht and that of JPIC will increase to 6.1 billion baht from the previous 5.5 billion baht. But the real impact will be smaller due to higher gas (BGRIM, JPIC) and coal (GPSC) costs. According to our sensitivity analysis, a Bt1/mmbtu increase in gas costs will reduce BGRIM’s net profit. 18 million baht and JPIC decreased from 30 million baht.
Good momentum, but lower earnings and margins than before the energy crisis
BGRIM and JPIC margins are expected to improve in the first half of 2023. We expect LNG prices to rise to USD 36/mmbtu this month after falling to USD 25 in September. Gas-fired power plants account for 75% of total and 51% of BGRIM and GSPC capacity, respectively. We maintain our HOLD rating on BGRIM and GPSC.
