On Monday, the share price of Electricity Generating Public Company Limited (SET: EGCO) at the time of 2:23 p.m. was at THB 130.50, a THB 1.50 or 1.16% increase with a total trading value of THB 204.71 million.
Krungsri Securities stated in a research note regarding EGCO following the company’s announcement to acquire a 45% stake in the Astoria Energy II (AE II) gas-fired power plant project, which has a total capacity of 615 megawatts (approximately 277 MWe based on ownership proportion), located in New York State, United States.
The project commenced commercial operation (COD) in 2011 and holds a long-term power purchase agreement with the New York Power Authority (NYPA) running through 2031, while in the subsequent phase, EGCO expects to be able to extend the contract or transition to selling electricity in the New York Independent System Operator (NYISO) market.
Meanwhile, the brokerage views the AE II project as having the potential to deliver solid long-term returns, driven by local power system reliability requirements combined with constraints on adding new capacity due to a shortage of gas turbines, leading EGCO to estimate an internal rate of return (IRR) of 10 – 12% and expect the transaction to close within the first quarter of 2027.
Krungsri holds a positive outlook on the project, noting that AE II has not yet been included in current forecasts, with preliminary estimates indicating it will generate incremental profit of approximately THB 400 million per year, representing an added value to the target price of about THB 8 per share.
Regarding valuation assumptions, the securities firm assumed capital expenditure per megawatt (CAPEX/MW) of around THB 60 million, a price level close to the construction cost of a new power plant under current gas turbine cost conditions, while projecting total power revenues—combining capacity payment (CP) and energy payment (EP)—at around THB 4 billion annually, applying an interest rate assumption of 5%.
In addition, the project is assumed to be able to extend its contract or transition to selling electricity in the NYISO market for approximately another 20 years from the present, drawing a comparison to power plants in the Compass group, which have operated since around 2000 and continue to sell electricity in the NYISO market today.
Regarding the earnings outlook for the third quarter of 2026, Krungsri expects normalized profit for EGCO to increase both year-on-year and quarter-on-quarter from a low base, driven primarily by the QPL power plant, which is projected to turn around from a loss in the third quarter of 2025 to a profit after resuming normal operations for a full quarter.
Meanwhile, profit sharing from the Compass and Linden projects is expected to increase due to higher CP rates, combined with seasonal factors as operational performance typically reaches its annual peak during this period.
In addition, the company could recognize an extraordinary profit of approximately THB 1 billion from the sale of a 49% equity stake in the KLU and BLU projects, which will provide further support to earnings during the quarter.
For the long-term outlook, Krungsri views EGCO as maintaining a strong financial position, with remaining cash of approximately THB 32 billion, leaving the company well-prepared for additional investments and standing out as an attractive dividend play option in the power plant sector.
The brokerage estimated that EGCO has the potential to consistently pay a dividend per share (DPS) of approximately THB 6.50 per share annually, representing a dividend yield of about 5% per year—the highest level in the power plant sector according to research estimates.
Nevertheless, Krungsri maintains a “Neutral” rating for EGCO with an unchanged 2027 target price of THB 124 per share, based on the sum-of-the-parts (SOTP) method under the weighted-average cost of capital (WACC) assumptions of 6% and 0% terminal growth.
Furthermore, the target price does not yet incorporate upside from new projects, including the investment in the 277 MWe gas-fired power plant in the United States and opportunities to secure additional power capacity under the PDP 2026 plan.
