MBKET Sees EA’s Profit Growth Accelerating, with EV Business Serving as a New Driver

Given worldwide awareness of climate change, Energy Absolute Public Company Limited, which trades on the Thai stock exchange under the symbol “EA,” has entered the EV megatrend in order to meet global efforts to be more environmentally friendly.

For the third quarter ended 30 September 2021, EA earned a net profit of THB1,616.26  million, an increase of 44.44% as compared to the same period of last year which incurred a net profit of THB1,119.00 million, and a total revenue of THB5,178.45 million, increased by THB1,377.15 million or 36.23% from the same period of last year, with revenue from battery and electric car business amounted 541.21 million.

EA is committed to operating a pollution-free green product business through the development of sustainable renewable energy and the development of commercial electric vehicles, including electric buses and electric ferries, that utilize cutting-edge technology and are ecologically friendly. The company’s goal is to contribute to Thailand’s economic, social, and environmental sustainability.

With the EA’s aims and strategies, as well as the Thai government’s focus on clean energy, Maybank Kim Eng Securities (Thailand) (MBKET) adjusted its assumption by removing the home use cars and replacing them with electric buses, which have already started to generate income. With the support of the EV board and the reasonableness of the price until the actual business with the private bus operators, MBKET expects EA’s 3,000 electric bus capacity to be fully assembled within the next four years.

MBKET therefore raised 2022-23-24 earnings by 6.3-15.7-45.0%. Note that the THB6.50 adder for the 90MW Solar power plant in Nakhon Sawan province will expire. Revenue from EV business can still be replaced in a timely manner. Even if the GPM declines due to the change in revenue structure, normalised profit can still grow +2.9% YoY.

Overall, MBKET has given a “BUY” recommendation on EA, with a target price of THB90.00 for 2022, representing an increase of +89% on a 25.5x P/E basis.