BANPU – Curtain to draw on ‘Hongsa project’ case while 1QFY18 profit looking bright February 8, 2018
BANPU will hear the Supreme Court deliver its judgment on the case on Mar 6, 2018, 9am. The reading of the ruling is expected to take less than two hours. The stock will be on the halt during the final trial. We expect the highest impact of the court decision on BANPU at Bt6.15/share if it loses the case.
In our view, 1QFY18 profit will continue its upward trend as BANPU will (i) benefit from the sustained high coal prices of US$104-108/ton, buoyed by high coal demand in China during the winter period and (ii) receive a boost from a full-year revenue contribution from gas business.
Our ‘BUY’ rating on BANPU shares remains intact with an SOTP-based target price of Bt25/share (excluding possible damage from the court ruling). Of the Bt25 target price, Bt14.7 came from coal business, Bt10.5 from power plant business and Bt0.40 from natural gas business.