GPSC Shares Fall 5% on Disappointing Second-Quarter Earnings

Shares of Global Power Synergy Pcl. (SET: GPSC) fell 5% during Thursday’s morning session as investors reacted negatively to the leading utilities service provider’s 2Q23 earnings. Still, analysts predicted a rebound in the second half of the year.

As of 11.14 A.M. Bangkok time, the share price of GPSC dropped THB2.50/share, or 4.59%, to THB52.00/share, with a trading value of THB1,035 million.

Net profit for GPSC in 2Q23 was THB309 million, decreased by THB 375 million from 2Q22 mainly due to lower contribution from its associates and joint ventures, namely Xayaburi hydro power plant (XPCL) and Changfang and Xidao (CFXD). XPCL’s share of profits was reduced by THB477 million according to lower water levels compared to the same period of last year, which had higher than average water levels. In addition, CFXD contributed a higher share of loss of THB132 million due to a scheduled shutdown of wind turbine generation to connect and test the system. 

Moreover, other income and expenses and others decreased by THB276 million mainly because in 2Q22, GPSC recognized net profit (before tax and related expenses) of THB388 million from selling battery-related assets to NUOVO PLUS. However, GHECO-One recorded higher Availability Payment (AP), thanks to no outage incidence in 2Q23. SPP’s operating performance increased significantly, driven by an increased Automatic Adjustment Mechanism (Ft). This resulted in an improved electricity margin sold to industrial customers, despite having challenges from rising natural gas and coal prices and lower demand for electricity and steam from maintenance shutdown of some industrial customers in 2Q23. 

Despite GPSC’s earnings falling short of expectations, Daol Securities has maintained its profit forecast for 2023 at THB3.9 billion, rebounding from a loss of THB9 million last year. The brokerage firm believes that GPSC is going to see a profit recovery in the second half of this year as a result of 1) Xayaburi hydro power plant entering its peak season and 2) energy costs falling faster than Ft will help GPM expand HoH and cause stock prices to potentially outperform the market. The price target for GPSC shares is now set at THB80.00.