CGS International Securities (Thailand) (CGSI) have upgraded their recommendation on Electricity Generating Public Company Limited (SET: EGCO) from “Hold” to “Buy” and raised the target price to THB 130 from the previous THB 110.
The revision reflects the unlocking of value from EGCO’s 30% stake in PT Chandra Daya Investasi Tbk (CDIA), a listed company in Indonesia. It is expected that CDIA will contribute at least 11% of consolidated net profit annually in 2026–2027.
The analysts have revised up core net profit forecasts for 2026–2027, supported by attractive valuations at a P/E ratio of 7x and P/BV of 0.5x for 2025–2026, compared to the sector average of P/E 18x and P/BV 0.95x, with ROE at 7%. Additionally, the dividend yield is 5.6%, well above the sector average. Although there remain concerns about EGCO’s reliance on coal, the diversified business portfolio and clear earnings outlook have already accounted for these risks.
CGSI also believes the market has already factored in the expected weaker 3Q25 results, both year-on-year and quarter-on-quarter, largely due to the expiration of the Kezson Power Plant (QPL) contract and a two-month maintenance shutdown. QPL resumed supplying electricity to the Philippines’ grid in September and is expected to return to full operations by mid-October 2025. As a result, earnings are expected to recover quarter-on-quarter in 4Q25. Meanwhile, CDIA and other key power plants in core markets will alter EGCO’s profit structure, reducing reliance on QPL.
Core net profit forecasts for EGCO have been upgraded by 57% for 2026 and 37% for 2027, reflecting lower SG&A and financial costs, together with higher share of profits and other income. By contrast, the 2025 earnings estimate has been revised down by 5% due to lower-than-expected share of profit from the Yunlin power plant, scheduled maintenance shutdowns at Marcus Hook and Linden in 1H25, and softer performance at Paju ES.
While EGCO faces short-term headwinds, fundamentals remain strong, and there could be further upside if EGCO acquires renewable power plants abroad in 2H25, with an investment budget of THB 30 billion for 2025.
Nevertheless, CGSI raises EGCO’s target price to THB 130 from THB 110, using the SOP (Sum-of-the-Parts) method, comprised of utility business value at THB 238 per share, and CDIA investment value at THB 20 per share, based on investment value and net cash/debt adjustments.
Downside risks include lower-than-expected PPA (Power Purchase Agreement) returns and project execution delays, while the share price may rise if QPL’s revenue is stronger than forecast and if the company continues to generate increasing returns from investments.
