As per an analysis by Kiatnakin Phatra Securities (KKPS), financial projections for Ratch Group Public Company Limited (SET: RATCH) have undergone adjustments, with anticipated earnings from 2025 onwards reduced by 4-9% to account for underwhelming operational outcomes in 2024.
The revised outlook now positions RATCH’s net profit after tax (NPAT) at THB 7.1 billion for 2025, marking a 17% year-on-year increase, and slightly higher at THB 7.3 billion for 2026, reflecting a 3% rise.
This growth trajectory is expected to be driven by the commercial operation of the HKP unit 2, a 770MW IPP joint venture with GULF, and the year-round contributions from the Paiton power plant (acquisition made in April 2024). Meanwhile, earning growth beyond 2025 is projected to remain stable.
Following earnings revision and update on WACC components (Rf 3%, Rp 8% and updated beta of 0.99x) and target yield of 5.5% (from 5%) as KKPS increases dividend yield spread target from 100bp to 150bp to reflect flat earnings growth outlook, RATCH’s target price is lowered from THB 35 to THB 30.5 based on the average between DCF (THB 31) and dividend yield target (THB 30).
The analyst predicts the normalization of earnings growth in the latter half of 2025, with current valuations reportedly factoring in the anticipated limited growth.
Notably, despite the potential for additional contributions from projects such as the HKP unit 2 and the Paiton, which will counterbalance the ending 1.4GW capacity of Ratchaburi Power (RG) by the close of the year, current high bond yields could impede a stock re-rating.
RATCH maintains a capital expenditure (CAPEX) target of THB 15 billion this year, aimed at project developments and potential acquisitions across the Philippines, Indonesia, and Australia. The analyst anticipates an incremental increase in dividends from THB 1.6 in 2024 to THB 1.65, aligned with improving earnings.
In 1Q25, the company posted a net profit of THB 1.2 billion, down 21% year-on-year. However, excluding foreign exchange and non-cash items, core profit amounted to THB 1.6 billion, up 14% year-on-year, supported by the HKP unit 2 and the Paiton project contributions.
Following these developments, KKPS maintains a ‘Neutral’ rating on RATCH and anticipates the company to report a net profit of THB 7.05 billion in 2025, climbing to THB 7.25 billion in 2026, and reaching THB 7.32 billion by 2027.
