Power Stocks Finish Higher after the ERC Gives Green Light to Increase Ft Rate

Power stocks finished higher on Thursday following the ERC’s approval of a rise in the fuel tariff (Ft) rate.

The share price of B.Grimm Power Plc. (SET: BGRIM) rose THB1.25/share or 3.65% to THB35.50/share with a trading value of THB738 million.

The share price of Global Power Synergy Plc. (SET: GPSC) rose THB2.50/share or 3.58% to THB72.25/share with a trading value of THB1,638 million.

The share price of Gulf Energy Development Plc. (SET: GULF) rose THB1.00/share or 2.05% to THB49.75/share with a trading value of THB1,045 million.

The share price of Electricity Generating Plc. (SET: EGCO) rose THB3.00/share or 1.77% to THB172.50/share with a trading value of THB221 million.

Capital Nomura Securities is slightly positive on the possibility of a higher-than-expected increase in the fuel tariff (Ft) rate since it would contribute to higher profits for power plant operators. According to the news, if the Energy Regulatory Commission (ERC) raises the ft rate by 23.38 satang/unit between May and August 2022 (assuming no objections during the hearing), electric bills will be higher than predicted. This will boost the profit margins to power plant operators, particularly those that supply power to industrial customers (IU), such as GPSC (37%), BGRIM (25%), and GULF (15%).

CNS favors GPSC as a top pick due to its positive factors, which are fueled by the new production capacity. And it is the biggest beneficiary of the Ft rate hike, despite GPSC’s share price is not priced in like GULF’s, nor does it have a capital overhang like RATCH’s.