BANPU Shares Slip 2% on Steep Earnings Drop, Analysts Cut Target Price

Share of Banpu Pcl. (SET: BANPU) fell more than 2% in Thursday morning trade after it reported a steep drop in first-quarter earnings and as analysts lowered their price target due to high volatility in commodity markets.

As of 11.21 A.M. Bangkok time, the share price of BANPU dropped THB0.20/share, or 2.33%, to THB8.40/share, with THB618 million. 

The first quarter of 2023 saw BANPU’s net profit drop to US$147 million, a fall of US$163 million (or 53%) from 1Q22. This was primarily from a decrease of natural gas and coal prices.

This quarter, the firm merged sales from its recently purchased North Texas shale gas company (3Q22). There was also an increase in profit recognition from joint ventures and associates, such as the highly productive HPC power plant in Laos and the SLG power plant in China, both of which turned a profit this quarter due to increased sales volume and the launch of power trading on the power market. 

In addition, the company booked profits on the revaluation of its battery business investment from before the business combination that it made during the current quarter. 

Following the results and gloomy outlook in the commodity market in recent months, Kiatnakin Phatra Securities decided to cut the target price for BANPU from THB16.0/share to THB13.3/share, but still reiterated a “BUY” rating. The brokerage also trimmed down its earnings forecast for 2023 by 8% to THB25.3 billion and lowered its P/E target from 4.9x to 4.6x as a result of the high volatility of commodity prices, particularly coal and US gas prices, over the past six months to reflect the growing risk condition.