KGI Securities (Thailand) has upgraded Electricity Generating Public Company Limited (SET: EGCO) to ‘Outperform,’ highlighting the company’s improving earnings outlook and new growth opportunities despite a recent period of earnings weakness.
The brokerage notes that primary structural challenges—such as lower market share at Paju ES, weak wind speeds and restructuring at Yunlin, and lower selling prices at Quezon under a new PPA effective October 2025—are already reflected in EGCO’s share price. Although second-half 2026 earnings are expected to remain seasonally weaker, 3Q26 net profit should recover both quarter-on-quarter and year-on-year.
This rebound will be supported by peak hydroelectric generation in Laos, reduced maintenance in U.S. projects, and over THB 1 billion in divestment gains from BPU and KLU, with additional upside from possible Apex asset sales.
KGI highlights EGCO’s more aggressive THB 30 billion investment budget and a broad project pipeline for 2026, including data center-focused power plants and potential joint ventures, as well as longer-term prospects in small modular reactors.
EGCO’s strong balance sheet—with significant headroom for further debt and a substantial cash position—prepares the company for these investments and ongoing bidding cycles under the country’s 2026 Power Development Plan (PDP 2026) and Direct PPA initiatives.
Despite cutting its 2026 core profit forecast by 26% to THB 2.9 billion (a 33% year-on-year decline), KGI expects earnings to rebound to THB 4.2 billion in 2027, a 41% increase, driven by improved operations and wind conditions. The target price for EGCO has been raised to THB 145.00 per share, accounting for the rolled-over valuation, outweighing the impact of the profit cut.
KGI argues that EGCO’s undemanding valuation, attractive dividend yield of approximately 5%, and under-owned status in the market offer strong downside support and rerating potential as key growth catalysts materialize.
