Krungsri Securities (KSS) wrote in its analysis on Electricity Generating Public Company Limited (SET: EGCO) that the brokerage recently conducted a site visit to the Quezon Power (QPL) 400 MWe and San Buenaventura Power (SBPL) 245 MWe coal-fired power plants, both located on Luzon Island in the Philippines.
Both facilities remain safe from any damage and are operating normally, as they are situated far from the epicenter of the recent earthquake on Mindanao Island.
EGCO sees considerable opportunities for growth in the Philippines, where electricity demand is currently increasing at an average rate of approximately 5% per year, compared to the global average of 3-4%. This robust growth is driven by both residential and industrial demand.
Existing coal and diesel plants in the Philippine grid, with a combined capacity of around 2.4 GW, are continuing to age and are anticipated to retire over the next decade. Given that the construction period for conventional power plants is about 5-7 years, these dynamics may lead to long-term opportunities for increased generation capacity investment.
The Philippine government’s target of raising the proportion of renewable energy in its mix from the current 25% to 35% by 2030 faces significant challenges due to transmission bottlenecks and insufficient infrastructure, which have led to slow progress in renewable energy additions.
At the same time, electricity tariffs have surged to 11-14 PHP/kWh (equivalent to about 5-7 THB/unit), making them the second highest in ASEAN. As a result, there is a possibility that the government may reconsider supporting new coal-fired power plants, which have lower costs compared to renewables.
From an investment perspective, Krungsri maintains a slightly positive view on EGCO’s long-term growth, based on several factors: 1) the growth potential in the Philippine electricity market, leveraging EGCO’s expertise in coal-fired generation and transmission lines; and 2) the upcoming Thai Power Development Plan (PDP), with EGCO well-positioned as one of the major operators able to address multiple objectives.
Notably, the company’s financial position (Net IBD/E of 1.1x) provides investment capacity of up to THB 190 billion. Furthermore, EGCO owns land in Nakhon Si Thammarat Province, originally the site of the decommissioned Khanom 2-3 power plants, which have been retired for about a decade. This land is ready for new Independent Power Producer (IPP) investments to meet rising electricity demand in southern Thailand, potentially supporting new IPP projects with a capacity of 800-1,000 MW, based on the size of the previous plants.
The preliminary estimate for normalized net profit in 2Q26 for EGCO is projected to decline year-on-year to a range of THB 1-1.2 billion, mainly due to lower earnings from QPL under a new PPA agreement; however, net profit is expected to increase quarter-on-quarter, supported by 1) the resumption of operations at NT1PC after a two-quarter closure for repairs following Typhoon Bualoi, and 2) higher equity income from IPP power plants, which offsets seasonal factors affecting Compass, Linden, Paju, and Yunlin.
As a result, Krungsri reiterates a ‘Buy’ recommendation on EGCO with a 2026 target price of THB 133 per share, based on a Sum-of-the-Parts (SOTP) valuation. EGCO remains an attractive option for dividend-focused investors, offering an expected dividend yield of around 6% per annum, while also maintaining the potential to return to growth stock status should new domestic or international projects materialize.
As of 2:12 PM (Bangkok time), the share price of EGCO rose by 0.87% or THB 1.00 to THB 116.00, with a trading value of THB 56.19 million.
