CGS International Securities (Thailand) (CGSI) maintained a ‘Hold’ rating on shares of B.Grimm Power Public Company Limited (SET: BGRIM), while revising its target price upwards to THB 17.00 per share from THB 14.00, driven by expectations of improving margins and sustained operational discipline.
Following the latest analyst meeting, CGSI forecasts BGRIM’s 3Q25 net profit to present a mixed picture—estimated at THB 112 million, dropping 31% year-on-year but recovering sharply on a quarterly basis. Core net profit is projected at THB 362 million, down 54% year-on-year and 24% quarter-on-quarter, with overall revenue likely down 9% year-on-year.
Despite weaker year-on-year numbers, gross margins are expected to recover sequentially, supported by a drop in gas costs and the end of retroactive gas charges. The broker notes that gas and fuel tariff relief should help margin improvement in the coming quarters.
Gas costs and fuel tariffs (Ft) are continuing their downward trend. Management has guided for gas costs in 4Q25 to be between THB 290 and THB 292 per mmbtu, with the full-year average expected to range from THB 300 to THB 320 per mmbtu—aligning with CGSI’s estimates.
The Ft for September to December 2025 has been set at THB 3.94 per unit, lower than previous periods, resulting in an annual average tariff of THB 4.02 per unit. CGSI maintains its Ft assumptions at THB 0.24 per unit for 2025, dropping to zero for 2026–2027.
BGRIM is targeting THB 10–15 billion in annual capex over 2025–2026, funded by a Blue Bond issuance and potential asset monetisation. The Blue Bond proceeds will finance the Nakwol 1 offshore wind project, which has reached 64% completion and aims for full commercial operation by mid-2026.
Management is also considering minority stake divestments (20–30%) in select assets to retain control while boosting liquidity, though pricing may vary. While this strategy supports ESG-linked financing, CGSI cautions that leverage is expected to remain high, with a projected net debt-to-equity ratio of 2x by end-2025, as capital proceeds are likely to be reinvested.
Notably, upside risks include stronger debt reduction and robust industrial user demand, while delays in the Nakwol project or weaker-than-expected tariffs in Vietnam could present downside risks.
Similarly, TISCO Securities reiterated a ‘Hold’ rating on BGRIM with a target price of THB 15 per share, citing a recovery in headline profit for 3Q25, mainly driven by foreign exchange gains. However, the firm expects underlying operational momentum to be weaker than competitors like GPSC, forecasting 3Q25 normalized net profit at THB 402 million—a 15% drop quarter-on-quarter and 50% drop year-on-year.
Despite margin improvements from lower gas costs in the SPP cogeneration segment and rising electricity sales to industrial users, these are largely offset by weaker hydro power, reduced EPC revenue, widening equity income losses, and higher maintenance costs. Additionally, steam sales are likely to remain under pressure due to continuing weak demand and lower prices.
The analyst noted Bloomberg recently reported that Sembcorp Industries is in talks to acquire a 25–30% minority stake in BGRIM’s gas-fired business, for USD 500–600 million. If finalized, BGRIM’s net debt-to-equity ratio could fall to approximately 1.5x in 2026.
TISCO favors GPSC over BGRIM due to a more appealing valuation and better balance sheet flexibility. The THB 15 target price for BGRIM is based on the DCF methodology and a targeted mid-2026 PE of 12x.
