RATCH: FY17 down 1% y-y February 15, 2018

  • FY17 profit drops 1% y‐y: RATCH reported an FY17 net profit of Bt6,106.7mn, representing a y‐y decrease of 1% from Bt6,165.72mn in FY16. The slight profit decrease was due to more scheduled maintenance shutdowns than in FY16. However, revenue (excluding fuel costs) and profit contributions improved on the back of a y‐y increase in availability factor of subsidiaries and the recognition of commercial operations of all three units at Hongsa power plants after the third unit achieved its COD in FY16.
  • More positive outlook seem for FY18 profit: We expect RATCH’s FY18 net profit will be better than last year as FY18 will not have scheduled maintenance shutdown as seen in FY17. The anticipated additional revenue from Collinsville power plant in Australia expected to reach COD in 2QFY18 and ancillary service deed system restart service of Australia’s Kemerton power plant should gradually push GULF’s profit growth higher going forward.
  • ‘ACCUMULATE’ rating but target price placed under review: RATCH sports a dividend yield of 4% which makes it one of the most compelling stocks in the sector in terms of dividend payout. On this basis, we rate RATCH share an ‘ACCUMULATE’ for a long‐term investment but put the target price under review.

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