Kiatnakin Phatra Securities (KKPS) has reiterated its positive stance on Thailand’s utilities sector, maintaining ‘Buy’ ratings on GULF and BGRIM as the brokerage firm expects macroeconomic headwinds to ease significantly in 2026, ushering in improved margins and potential growth opportunities.
KKPS projects combined net profit after tax (NPAT) for leading utility companies BGRIM, GPSC, and GULF to reach THB 38 billion in 2026, marking a robust 19% year-on-year increase. GULF is anticipated to lead sector growth with NPAT soaring 22% to THB 28 billion, while GPSC and BGRIM are expected to post gains of 11% and 7%, respectively. Over the 2025-2027 period, GULF is also forecast to deliver the highest compound annual growth rate (CAGR) at 18%.
Sector valuations are currently near their historical lows, with price-to-earnings and price-to-book ratios at -1 standard deviation from the historical average since 2012. This is partially attributed to the elevated US 10-year Treasury yield (US10YY). However, with expectations that US interest rates will fall by 2026, valuations are likely to rebound. Lower feedstock costs, most notably an 8% year-on-year decline in pool gas prices and softer LNG and oil prices, should further improve power generation margins.
KKPS also sees the impending release of a new Power Development Plan (PDP) as a potential catalyst. This is anticipated to reflect higher electricity demand from Thailand’s fast-growing data center and electric vehicle sectors. Even in the most conservative scenarios, the country may require an additional 2.5GW in new capacity, possibly reviving demand for conventional power plants alongside ongoing community solar initiatives.
The upcoming 2026 election poses a potential near-term headwind, as political parties may introduce measures to curb living costs, often targeting utility tariffs. Nevertheless, KKPS views such interventions as temporary, pointing to historical patterns of sector recovery following past elections.
