Citi Research has initiated coverage of Gulf Development Public Company Limited (SET: GULF), Thailand’s largest power developer, with a “Buy” rating and a target price of Bt60, based on 30x 2026E price/earnings ratio (PER). Highlighting GULF’s role as a “proxy” for the nation’s green energy transition, Citi points to the company’s robust fundamentals and significant growth prospects under Thailand’s evolving Power Development Plan (PDP).
Over 80% of GULF’s revenue comes from cost-plus, long-term power purchase agreements (PPAs) with the state utility, lending defensiveness and visibility to its earnings. Citi added that GULF is committed to generating capacity to grow at a compound annual rate of about 6% from 2024 to 2031, alongside an estimated 14% earnings CAGR over 2024-27, with potential for further upside.
Citi expects GULF’s operational cash flow to hover around Bt52 billion per year in 2025-27, primarily from gas power and associated income streams, underpins a free cash flow yield of 4.5%. The company plans Bt90 billion in equity capital expenditure over 2025-29, roughly 80% of which is earmarked for renewables, aligning with the 2024 draft of Thailand’s PDP. According to the plan, renewables should make up 51% of the country’s energy mix by 2037, up from 22% in 2023. This will require procurement of an additional 38,800MW in peak capacity from private producers through 2037.
With Thailand expected to finalize its PDP by mid-2026 and move toward a net-zero target by 2050, GULF is well-placed to benefit, according to Citi. The shift to renewables, which have lower capacity factors than gas, will drive demand for more installed capacity, supporting further growth even amid high reserve margins.
Citi’s valuation premium for GULF—30x 2026E PER, double the Thai power sector average—reflects its growth outlook, proven PPA bidding success, and balance sheet flexibility (net gearing at 0.8x versus a 3.5x covenant). Its history includes winning 54-100% of capacity in past state tenders, demonstrating clear expertise and scale.
Key risks cited are potential delays in PDP approval and any renegotiation of existing PPAs, though Citi views these as unlikely.
