THIS DOCUMENT HAS BEEN PREPARED BY KASIKORN ... - …We derive a YE2015 fair value for GPSC...

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INVESTORS SHOULD READ THE PROSPECTUS IN DETAIL BEFORE MAKING A DECISION TO INVEST IN THE SHARES OF GLOBAL POWER SYNERGY PUBLIC COMPANY LIMITED.

20 April 2015 2 Global Power Synergy PCL

Global Power Synergy PCL

Strongest growth in the power sector We derive a YE2015 fair value for GPSC atBt30.0-34.0 using DCF and PEG methodologies. As GPSC has secured five main power projects to be implemented during 2015-19, we expect it will deliver the strongest earnings growth in the power sector at 17.1% CAGR for 2015-17 and 16.7% CAGR for 2015-19. Unlike other power producers, the upside to GPSC will be supported by investments in power projects related to PTT Group’s business expansion. This exclusive growth will come on the top of normal industry growth upside from regional power demand, the favorable environment for renewable power projects and IPP biddings in Thailand.

Investment highlights ► Assured capacity growth of 7.1% CAGR during 2015-19 ... GPSC's power-

generating capacity should increase by 40.8% by 2019, or 7.1% CAGR during 2015-19, driven by its five main power projects (IRPCCP 1 & 2, NNEG, BIC 2, NL1PC and XPCL). The risk of delay, postponement or cancellation for these projects is low due to GPSC's secured Power Purchase Agreements with EGAT, on-schedule construction progress to date and ample financial resources despite Thailand's excessive power reserve margin creating downside for new power projects during the first half (2015-26) of the new PDP2015.

► ...with another 5.8-9.0% CAGR upside from its ambitious strategies: GPSC plans to add new power generating capacity of 600-1,000MW in the next 5 years, implying a growth rate of a further 5.8-9.0% CAGR. This plan will be achieved through four main strategies: i) Growth on the back of PTT Group’s expansion (e.g. expansion of CUP4 to support PTTGC's plant expansion and other international investments to support the expansion of PTTEP and PTTER); ii) Quick Win (e.g. a current solar power project with a capacity of 90MWthat is undergoing a feasibility study); iii) Big Win (green-field mega power projects, new IPP bids and other international projects); and iv) Adjacent &support opportunities(e.g. ESCP, transmission and distribution business, energy storage, utilities provision).

► Strongest earnings growth with healthy financial position: We expect GPSC will post net profit growth of21.0%, 5.8% and 25.4% in 2015-17, implying a CAGR of 17.1%, the highest rate among major Thai power producers. The key growth driver will be the addition of 215MW of capacity, which will lift its existing capacity of 1,315MW to 1,530MW in 2017.An ability to deliver new projects under its Quick Win strategy will create upside for our earnings forecasts. Meanwhile, its D/E will track in range around 0.5x, while ROE and ROA will gradually improve on the completion of key projects from 2016 onward.

► Growth rather than dividend play: GPSC will likely make a dividend payment of around Bt0.30/share in 2015 based on a 50% payout ratio, representing a 1.0% yield. Even though its dividend is not attractive compared to those of its peers at around 1.0%-4.3%, the company is likely to pay a higher dividend every year, as its earnings improve. However, after all its projects are completed and generating sizable cash flow in 2020, GPSC’s dividend will improve significantly with an expected yield of 5.0%.

Valuation ► 2015 fair value in a range of Bt30.0 to Bt34.0 per share: We derive our

2015 fair price using a discounted cash flow (DCF) approach and price/earnings to growth (PEG) methodology. For our DCF approach, we used a WACC of 6.3% and capital structure of 75:25, while applying a PEG of 1.6x for the PEG valuation.

GPSC TB IPO Fair price Bt30.0-34.0 Valuation DCF Sector Energy & Utilities No. of shares on issue m 1,498

Investment fundamentals

*Assuming IPO price of Bt27.0

DISCLAIMER KASIKORN SECURITIES PUBLIC COMPANY LIMITED MAY BE ACTING AS ANUNDERWRITER FOR THE OFFERING OF THE SHARES OF GLOBAL POWER SYNERGY PUBLIC COMPANY LIMITED. INVESTOR SHOULD READ THE PROSPECTUS IN DETAIL BEFORE MAKING A DECISION TO INVEST IN THE SHARES OF GLOBAL POWER SYNERGY PUBLIC COMPANY LIMITED. THE BLACK-OUT PERIOD STARTS FROM 22 APRIL 2015 TO 6 MAY 2015.

Analyst (s) JakapongChawengsri [email protected]

VoranartMeethavorn (Assistant Analyst) [email protected]

20 April 2015 Kasikorn Securities Public Company Limited

Year end Dec 31 2013 2014 2015E 2016ECompany FinancialsRevenues (Bt m) 25,596 23,654 23,496 25,289

Core net profit (Bt m) 1,257 1,586 1,910 2,021

Net profit (Bt m) 1,144 1,578 1,910 2,021

Net EPS (Bt) 1.02 1.40 1.27 1.35

DPS (Bt) n/a n/a 0.26 0.67

BV/shr (Bt) 21.68 23.15 25.13 25.96

Net EPS growth (%) n/a 37.98 (9.24) 5.82

ROA (%) 2.64 3.68 3.50 3.48ROE (%) 4.69 6.07 5.07 5.19Net D/E (x) 0.78 0.65 0.45 0.49

ValuationPE (x) n/a n/a 21.18 20.02

PBV (x) n/a n/a 1.07 1.04

EV/EBITDA (x) n/a n/a 12.21 12.32

Dividend yield (%) n/a n/a 0.97 2.50


Investment Highlights Secured capacity growth of 7.1% CAGR until 2019 GPSC's power-generation capacity should expand by 40.8%by 2019, which is equivalent to a CAGR over the period of 7.1% (Fig 1). This impressive capacity growth will be secured by five ongoing power projects (IRPCCP 1 & 2, NNEG, BIC 2, NL1PC and XPCL), which will fuel earnings growth of 16.7% CAGR during 2015-19. The risk of delay, postponement or cancellation for these developing projects is low due to its secured Power Purchase Agreement with EGAT, on-schedule construction progress to date and sufficient financial resources, despite Thailand's excessive power reserve margin creating downside risk for new power projects in Thailand during the first half (2015-26) of the new PDP2015.

In 2015, GPSC will have a production capacity of 1,315MW of electricity, 1,345 tons per hour of steam, 2,080 cubic meters per hour of industrial water and 12,000 RT of chilled water. New production capacity to be added during 2016-19 will comprise 536MW of electricity and 167 tons per hour of steam (Fig 2). Given this, total production capacity in 2019 will reach 1,851MW of electricity (1,504MW from domestic sources and 347MW from overseas) and 1,512 tons per hour of steam.

Fig 1 Expect capacity to reach 1,851MW by 2019 Fig 2 2016-19E expansion program

Source: GPSC and KS Source: GPSC and KS

...with another 5.8-9.0% CAGR upside from its ambitious business plan

Based on GPSC’s business strategy, we see several opportunities to expand its operation both domestically and internationally. GPSC plans to add new power generating capacity of about 600-1,000MW in the next 5 years, implying a CAGR of a further5.8-9.0% (Fig 3). This planned additional capacity will boost GPSC's portfolio from 1,851MW to 2,451-2,851MW in 2019.

1,315 1,338 1,3761,530 1,530

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NNEG(38MWe)

IRPCCP Phase 2

(99MWe)

BIC2(29MWe)

NL1PC(26)

XPCL(321MWe)

2015

IRPCCPPhase 1

(23MWe)


Fig 3 Targeted capacity from growth strategy

Source: GPSC and KS

The company's business strategy is explained as follows:

Growth along with PTT Group: GPSC is positioned as an investment arm of PTT Group for expansion in the power business, both domestically and internationally. Apart from its individual expansion projects, the company has opportunities to expand its production capacity in accordance with the needs of the other companies in the PTT Group—e.g. PTTGC's capacity expansion (expansion of CUP4), as well as PTTEP and PTTER's international expansion. In addition, GPSC can utilize the strengths of PTT Group’s good reputation, connections and support to find strategic partners for future expansion projects or growth opportunities.

Fig 4 PTT Group's business company Fig 5 Business area of PTT Group


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Quick Win Big Win Total capacity in 2019

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1,851


Quick Win: GPSC will search for new projects with short construction periods, e.g. renewable power plants to generate quick earnings for the company. Currently, the company is studying the feasibility of a solar power project with a capacity of 90MW. Moreover, the acquisition of operating or under-construction assets locally and overseas are incorporated in this strategy.

Big Win: GPSC will look for opportunities in green-field mega power projects internationally to boost its earnings prospects in the long term, such as a 500MW gas-fired power project and a 1,800MW coal-fired power project in Myanmar. This strategy will emphasize the role of GPSC in the regional power project development market, which has a more attractive electricity demand growth outlook (about+5% CAGR during 2014-35) than Thailand. GPSC can either cooperate with current business partners or find new strategic partners to participate in new power project biddings to add to its portfolio.

Adjacent & Support opportunities: GPSC will invest in other potentially related business such as ESCP, transmission and distribution business, energy storage, and utilities provision.

Fig 6 Growth plan Fig 7 Current partners


Well-managed assets with diversity of fuel types and locations GPSC has invested in various types of power projects including gas-fired power plants, hydro-power plants and renewable power projects in order to diversify its sources of income and protect against any downside risk to its revenue recognition should any particular operation run into difficulties or failure. This strategy will also enhance GPSC's experience in a wide variety of power businesses, creating more opportunities for future expansion compared to companies that specialize in only one or two types of power plants. In addition, the company's assets are spread across 8 provinces around Thailand and in 2 cities in Lao PDR, creating a diversification that lowers the company's operational risk from project locations and political uncertainty.


Fig 8 GPSC's assets classified by fuel type Fig 9 Asset location


Good match between cash inflow and cash outflow GPSC’s prudent project plans will strengthen its liquidity and lower financing costs. Its well-planned timeline for construction and commercial operating dates for ongoing power projects during 2016-19 will allow GPSC to utilize cash flow from completed projects to support projects under construction. This combination of huge cash flow from operating projects, secured debt financing and equity injection from the IPO about Bt10bn, should ensure that cash flow will be sufficient to support the five main power projects GPSC is currently developing and future investment plans.

Fig 10 Cash flow from operation and CAPEX

Source: GPSC and KS

Ready to participate in the next round of IPP bidding In line with the NEPC's policy to boost coal-fired power capacity, the fourth-round of IPP bidding for coal-fired power plants is expected to be called during this government's term in order to increase the likelihood of the scheme's success. Based on its Big Win strategy to get mega power projects, the company is likely to participate in this attractive opportunity. At present, the firm is looking to secure land for a coal-fired power project.

79.0%64.0%

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Exisiting capacity Aspiration capacity in 2020

Natural gas Hydro Renewable Coal

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Industry Outlook Regional's electricity demand to grow 5% CAGR during 2014-35 According to the ADB Energy Outlook for Asia and the Pacific in October 2013, regional electricity demand growth is expected to increase at 5% CAGR during 2014-35 based on the establishment of the ASEAN Economic Community (AEC). The most attractive markets will be in Southeast Asia such as Lao PDR, Myanmar, the Philippines and Vietnam. The key factors supporting this positive outlook are: 1) the high potential for economic growth; 2) the favorable regulatory environment; 3) existing and untapped natural resources for power generation; and 4) potential electricity demand.

Thailand's electricity demand under new PDP2015 Overload of country's reserve margin

Electricity demand growth in Thailand over the past decade has slowed due to weak economic growth, resulting from both external factors (global financial crisis) and internal factors (political instability). Given this, Thailand's power reserve margin will likely rise to 30-40% compared to the standard range of 15-20% as electricity demand falls short of the previous forecasts.

According to PDP2010 (Revision 3), Thailand's peak demand for electricity is expected to increase to 52.3GW in 2030 from 26.9GW in April 2014, equivalent to a growth rate of 4.2% per year (based on GDP growth of 4.5% per year on average). As a result, total installed capacity in 2030 will rise to 70.7GW from 39.5GW in 2014. However, we expect the new PDP2015 to adjust down its GDP growth forecast to 3.8% based on the latest forecast for economic growth by the Bank of Thailand (BOT). Taking this into account, we estimate electricity demand to grow at 3.5% CAGR to 46.7GW by2030 (Fig 11).After combining the weaker power demand with the current schedule for new power plants in PDP2010 rev.3, we estimate the power reserve margin will reach 38%-40% by 2019-23(Fig 12).

Fig 11 Lower electricity demand in PDP2015 Fig 12 Reserve margin exceeds needs

Source: EPPO and KS Source: EPPO and KS

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* Based on peak demand in 2014 at 26.9GW and annual growth rate of 3.5%** Based on PDP2010 rev.3


Cancellation/postponement risk to new capacity

Khun Kraisi Karnasuta, head of the Energy Regulatory Commission (ERC), recently stated that the ERC would make adjustments to some of the planned capacity to lower the reserve margin level. The targeted capacity to be cut or postponed should come from power plants that are still in the development stage or that have a low possibility of being developed.

The regulator has indicated it would postpone power capacity of 8.3GW, which might come from 3 sources: 1) 1.2GW of capacity from EGAT's IPP program; 2) 5.5GW from private sector IPPs; and 3) 1.5GW from private sector SPPs (Fig 13).Based on the commercial operating schedule in PDP2010 rev.3, such postponements would start lessening power capacity from next year (Fig 14) and will bring the power reserve margin back to 26% in 2023 (Fig 15).Additionally, we see a low possibility for the development of 2 nuclear power projects with a combined power generation capacity of 2.0GW in 2026-27. Therefore, the power reserve margin may be as low as 22% by the end of the forecast period of the new PDP2015.

Fig 13 List of power plants that may be required to postpone their CODs

Source: EPPO

Fig 14 Expected capacity postponement Fig 15 Expect 10.3GW to be shifted

Source: EPPO and KS Source: EPPO and KS

More focus in coal, alternative and import segments

Based on the recent statements of the NEPC, the new PDP2015 will include a revision of the fuel mix for power generation. We expect the new plan will boost the contribution of coal, alternative energy and imported power to around 25%, 23% and 20%(Fig 16), respectively, by the end of the projected period in order to increase the security and efficiency of the national grid. Natural gas, which currently accounts for about 65% of the fuel used to produce electricity, will become less important.

Power plants Capacity (GW) Year of COD Fuel used

IPP of National Power Supply 0.54 2016-17 Coal

SPP 1.53 2017-19 Gas

3rd IPP bidding 5.00 2021-26 Gas

EGAT's IPP to replace Wang noi #1-2 1.20 2027-28 Gas

Total 8.27

43 45 46 47 49 48 48 52 50 52 53 57 56 57 59 60

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2019: SPP 0.63GW2021: Gulf 2.5GW

2023: Gulf 2.5GW 2027: EGAT IPP 0.9GW & Nuclear 1.0GW

2028: EGAT IPP 0.3GW & Nuclear 1.0GW


Fig 16 Targeted energy types in new PDP2015

Source: NEPC, EGAT and KS

Fourth round of IPP bidding: Coal-fired power projects

The fourth-round of IPP bidding for coal-fired power plants is expected to be initiated during this government's term to increase the likelihood of its success. We expect that not many bidders will participate owing to the small number of experienced players in this area. The potential bidders are likely to be the main players in the power business who already have secured land with a confirmed availability for transmission capacity.

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PDP2010 Rev.3* Forecasted PDP2015**

* Installed capacity in 2030 is 71GW based on PDP2010 rev.3** Installed capacity in 2026 and 2036 should be 60GW and 84GW based on installed capacity of 40GW in 2014 and annual growth rate of 3.5%.


Financial Highlights Strongest growth in the power sector 2015-17E net profit CAGR of 17.1%

We expect GPSC to report net profit growth of 21.0%, 5.8% and 25.4% in 2015-17, respectively, implying a CAGR of 17.1% compared to its peers' 1.0-16.0%. The main earnings driver will be a capacity expansion of 215MW from the current 1,315MW to 1,530MW in 2017.The contribution of RPCL and TSR is the main earnings driver in 2015. Meanwhile, the completion of NNEG will be the main growth engine in 2016. Earnings growth will increase significantly in 2017 on the start-up of 3 projects (BIC2, NL1PCand IRPCCP Phase 2), while 2018 profitability will be driven by the full-year contribution of IRPCCP Project (Bt420mn per year).

Bottoming out ROE and ROA

GPSC’s return-on-equity (ROE) should drop slightly to 5.1% in 2015 from 6.3% in 2014 due to the larger equity base from the IPO proceeds. We also expect to see a slight decline in return-on-assets (ROA) to 3.5% in 2015 from 3.7% in 2014 due to construction progress at ongoing projects. However, both ratios will improve from 2016, thanks to the gradual completion of key investment projects in 2016-17. Its earnings improvement in the period will see ROE and ROA increase from 5.1% to 7.7% and 3.5% to 5.6%, respectively (Fig 18).

Fig 17 Expect 2015-17E net profit CAGR of 17.1% Fig 18 Upward trend of ROE and ROA during 2015-19E


Healthy financial position

Low leverage during construction phase

We expect GPSC's debt-to-equity (D/E) will decline from 0.65x in 2014 to 0.45x in 2015, thanks to the large amount of new capital from the IPO(Fig 19). In 2016-17, its D/E ratio should return to an upward trend at 0.49x due to the drawdown of loans for its under-construction projects. However, we view this rising D/E ratio as insignificant given the company has regular debt repayments of its operating projects.

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Remaining cash available for new investment

The IPO proceeds will greatly enhance GPSC's cash position to its current projects and future investment opportunities. The company has no concerns about cash availability for its under-construction projects as its cash on hand at the end of the year will be as high as Bt8.3bn, Bt4.4 and Bt1.8bn in 2015-17(Fig 20), after taking into account all CAPEX needs and scheduled loan repayments and assuming no extra-loan draw-downs outside committed projects. Given this solid cash position, remaining cash on hand and available debt capacity will be used to support future investment opportunities.

Fig 19 D/E after IPO not higher than 0.50x Fig 20 Year-end cash available


Growth rather than dividend play

We expect GPSC will make a disbursement of around Bt0.30/share in 2015 (50% payout ratio), representing a 1.0% dividend yield (Fig 21). Even though its dividend yield is not attractive compared to its sector peers' yield of around 1.0%-4.3%, the company is likely to pay higher dividends each year, as its earnings improve. However, after all its projects are completed and generating sizable cash flow in 2020, GPSC’s dividend will improve significantly to an expected yield of 5.0%, compared to its peers' 1.7%-5.3%.

Fig 21 Expect continuous increases in dividend payment

Source: GPSC and KS

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Valuation and recommendation ► 2015 fair value in a range of Bt30.0 to Bt34.0 per share: We derive our 2015 fair price for

GPSC using discounted cash flow (DCF) and price/earnings to growth (PEG) methodologies. We believe the DCF approach is an appropriate way to value GPSC since its revenue and cash-flow stream are predictable. Meanwhile, the PEG methodology allows us to compare GPSC against its peers since their growth is at different levels.

► Key assumptions

For the DCF valuation, we applied a WACC of 6.3% and capital structure of 75:25 to derive a value of Bt30.0. We used an average power plant life of 25 years. We assume no terminal value as we do not expect any extension in the contracted period due to the overly high power reserve margin environment. As a result, this fair value is equal to 2015-16 PER multiples of 23.5x and 22.2x, respectively, which are about the average range for the sector.

For PEG valuation based, we applied a PEG of 1.6x, equivalent to our sector top pick's figure (RATCH), to achieve a value of Bt34.0. We think that GPSC should not trade above 1.6x PEG as it has a smaller production capacity base (compared to RATCH and EGCO), no dividend support to the downside from any project failure (compared to RATCH and EGCO) and no merger theme (as is the case with CKP with TTW).

Fig 22 Peer comparison

Source: CKP, EGCO, GLOW, RATCH, GPSC and KS

Fig 23 PER comparison Fig 24 PEG of sector players

Source: CKP, EGCO, GLOW, RATCH and KS Source: CKP, EGCO, GLOW, RATCH and KS

2015E 2016E 2015E 2016E 2015E 2016E 2015E 2016E 2015E 2016E 2015E 2016E

CKP 41.50 44.16 0.60 0.53 39.61 36.36 0.95 0.94 23.80 11.02 1.36 1.22

EGCO 9.68 9.30 1.03 0.98 16.20 15.81 4.30 4.47 7.08 4.13 10.66 10.58

GLOW 15.06 14.54 2.23 2.01 7.84 7.40 3.89 4.08 -5.17 3.62 14.81 13.84

RATCH 13.93 11.95 1.35 1.25 11.56 12.01 3.74 4.18 3.00 16.58 9.67 10.49

GPSC 21.18 20.02 1.07 1.04 12.21 12.32 0.97 2.50 21.02 5.82 5.07 5.19

Simple average 20.27 19.99 1.26 1.16 17.48 16.78 2.77 3.23 9.95 8.23 8.32 8.27

P/BV (x) EV/EBITDA (x) Dividend yield (%) Net profit growth (%) ROE (%)P/E (x)Stock

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

2013 2014 2015E 2016E 2017E 2018E 2019E 2020E

CKP EGCO GLOW RATCH

Time

1.6 2.02.6

14.5

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

RATCH EGCO CKP GLOW

*Assuming IPO price of Bt27.0


Risks and Concerns Natural gas risk The major fuel that GPSC uses is natural gas, which accounts for 80% of total capacity. As PTT is the only gas supplier in Thailand, the company is dependent on PTT for its main raw material. If there is a shortage of natural gas supply for any reason, it will lead to downside risk for GPSC's operating performance. In addition, delays in new projects' commercial operating dates are likely to happen in the case natural gas cannot be supplied to its power plants as scheduled. To protect against this risk, GPSC has signed a long-term gas supply agreement with PTT in order to its secure operating performance.

At present, GPSC's main operating cost comes from natural gas purchases, which accounted for 88% and 84% of costs in 2013-14. Change in the natural gas price will thus directly affect GPSC's bottom-line because a section of GPSC's customers are industrial users and they are not permitted under their contracts to fully pass through on fuel cost.

Under construction project risk GPSC currently has 5 projects under construction phase, namely NNEG, IRPCCP, XPCL, NL1PC and BIC2. In case these projects are not completed as planned for any reason such as delays in the construction process, community protests, natural disasters or overseas regulations, it will cause cost overruns, delay revenue recognition and result in lower-than-expected project returns. However, GPSC has addressed this risk by hiring experienced contractors with secured turn-key contracts and by closely monitoring project progress. In addition, the company has maintained good relations with communities around the projects to prevent complaints.

New investment risk To address concerns about the selection of new investments or strategic partners, the company has set prudent investment criteria for choosing new projects and partners. It also has finely analyzed macro and micro factors as well as run sensitivity analyses to determine the risk levels of projects. For partner selection, it will consider the partner's experience, expertise and financial position to ensure they generate benefits to the company.

Foreign currency risk Fluctuations in the exchange rate impact GPSC since it recognizes all revenue in THB while investment costs from future projects overseas may require foreign currency injections. Therefore, THB depreciation has the potential to hurt GPSC's financial status. To safeguard against this, the company closely monitors the exchange rate and uses hedging instruments. In addition, it will receive revenue in foreign currency in the future from its overseas projects, allowing it better manage this kind of risk.

Interest rate risk Given its loans carry floating interest rates, GPSC will incur a higher interest burden should rates rise in the future. The company understands this risk and will use interest rate swaps in the event of high interest fluctuations.


Company profile PTT Group's power provider Global Power Synergy Pcl. (GPSC) is a unit of the PTT Group and is viewed as one of the group's "Value Creators" to add continuous and sustainable growth in parallel with the group expansion as part of intention to be Thailand's premier multinational energy company.

GPSC was founded on 10th January 2013 with registered capital of Bt8,630mn following the amalgamation of PTTUT and IPT to be the power flagship of the PTT Group. During 2013-14, PTT Group transferred its power assets to GPSC to use it as a base for an expansion in the power business. The company's core business is generating and supplying electricity, steam, and processed water to customers. The integration has given it a total generating capacity of 1,851MW of electricity (1,504MW domestically and 347MW overseas), 1,512 tons per hour of steam, 2,080 cubic meters per hour of industrial water and 12,000 RT of chilled water.

GPSC's group structure includes 3 subsidiary companies, 5Associated companies and 2 Investment companies.

► Subsidiary companies

Combined Heat and Power Producing Co, Ltd (CHPP)

Natee Synergy Co, Ltd (NSC) - holding 25% in XPCL

IRPC Clean Power Co, Ltd (IRPCCP)

► Associated companies

Thai Solar Renewable Co, ltd (TSR)

Nam Lik 1 Power Co, ltd (NL1PC)

Nava Nakorn Electricity Generating Co, ltd (NNEG)

Bangpa-In Cogeneration Co, ltd (BIG)

Business Service Alliance Co, ltf (BSA)

► Investment companies

Ratchaburi Power Co, ltd (RPCL)

24M Technologies, Inc.


Fig 25 Company group structure and portfolio

Source: GPSC and KS


IPO Objective GPSC plans to raise capital via an initial public offering (IPO) of 374.57mn shares, which will account for 25% of the post-IPO total of 1,498.3mn shares, with a par value of Bt10.0 each. Of this, 365.26mn shares will be allocated to the public and the remaining 9.31mn shares will be offered under an ESOP program to GPSC's managements and employees. After the IPO, PTTGC will remain a major shareholder in of GPSC, holding 22.7% of the company, down from 30.3% at present.

Planned use of the proceeds

► Business expansion both in domestic and international markets

► Working capital and other general corporate purposes

Fig 26 Pre-IPO capital structure Fig 27 Post-IPO capital structure


30.3%

30.1%

27.7%

11.9%

PTTGC

PTT

Thaioil Power

TOP

22.7%

22.6%

20.8%

8.9%

25.0%

PTTGC

PTT

Thaioil Power

TOP

IPO


Source: GPSC and KS *Assuming IPO price of Bt27.0

Year-end 31 Dec

Income Statement (Btmn) 2013A 2014A 2015E 2016E 2017E Cashflow (Btmn) 2013A 2014A 2015E 2016E 2017E

Revenue 25,596 23,654 23,496 25,289 27,310 Net profit 1,144 1,578 1,910 2,021 2,535

Cost of sales and services -23,649 -21,571 -21,391 -22,641 -24,063 Depreciation & amortization 1,034 1,025 1,490 1,660 1,644

Gross Profit 1,947 2,083 2,105 2,648 3,247 Change in working capital -9,082 1,083 381 -568 -648

SG&A -281 -410 -376 -405 -437 Others 65 -276 -370 -245 -320

Other income 191 142 456 208 182 CF from operation activities -6,840 3,410 3,411 2,868 3,212

EBIT 1,856 1,815 2,185 2,451 2,992 Capital expenditure -18,178 -1,870 -3,693 -2,537 -364

EBITDA 2,890 2,840 3,675 4,111 4,636 Investment in subs and affiliates -2,560 -79 -3,366 -3,930 -3,454

Interest expense -601 -470 -546 -538 -601 Others 0 0 0 0 0

Equity earnings 2 268 376 478 576 CF from investing activities -20,738 -1,949 -7,059 -6,467 -3,818

EBT 1,145 1,606 2,014 2,392 2,967 Cash dividends 0 0 -393 -1,010 -1,268

Income tax -2 -27 -99 -137 -176 Net proceeds from debt 12,998 -206 -122 1,978 298

NPAT 1,144 1,578 1,916 2,255 2,791 Capital raising 14,630 0 10,114 0 0

Minority Interest 0 0 -6 -234 -256 Others -652 188 6 234 256

Core Profit 1,257 1,586 1,910 2,021 2,535 CF from financing activities 26,780 -166 8,450 1,201 -714

Extraordinary items 0 0 0 0 0 Net change in cash -798 1,295 4,836 -3,813 -2,645

FX gain (loss) -23 -8 0 0 0 Key Statistics & Ratio

Reported net profit 1,144 1,578 1,910 2,021 2,535 Per share (Bt)

Balance Sheet (Btmn) Reported EPS 1.02 1.40 1.27 1.35 1.69

Cash & equivalents 6,390 3,421 8,257 4,444 1,799 Core EPS 1.12 1.41 1.27 1.35 1.69

Accounts receivable 6,502 3,941 3,947 4,249 4,588 DPS n/a n/a 0.26 0.67 0.85

Inventories 0 389 359 352 379 BV 21.7 23.2 25.1 26.0 27.0

Total current assets 14,492 8,146 12,890 9,437 7,182 EV 42 44 30 34 36

Investment in subs & others 2,884 7,342 10,708 14,637 18,092 Free Cash Flow -6.09 3.03 2.28 1.91 2.14

Fixed assets-net 18,178 20,048 23,741 26,278 26,642 Valutaion analysis

Total assets 43,344 42,932 54,597 58,149 60,319 Reported P/E (X) n/a n/a 21.18 20.02 15.96

Short-term debt 360 0 0 0 0 Core P/E (X) n/a n/a 21.18 20.02 15.96

Accounts payable 3,112 2,276 2,350 2,529 2,731 P/BV (X) n/a n/a 1.07 1.04 1.00

Total current liabilities 8,056 5,203 5,161 5,455 6,463 EV / EBITDA (X) n/a n/a 12.21 12.32 11.56

Long-term debt 10,384 11,197 11,287 13,264 12,862 Price / Cahflow (X) n/a n/a 11.86 14.10 12.60

Total liabilities 18,983 16,914 16,942 19,250 19,897 Dividend yield (%) n/a n/a 0.97 2.50 3.13

Paid up capital 11,237 11,237 14,983 14,983 14,983 Profitability ratio

Share premium 3,393 3,393 9,761 9,761 9,761 Gross margin (%) 7.61 8.81 8.96 10.47 11.89

Retained earnings 10,187 11,508 11,870 12,881 14,148 EBITDA margin (%) 11.29 12.01 15.64 16.26 16.97

Minority interests 434 733 739 973 1,229 EBIT margin (%) 7.25 7.67 9.30 9.69 10.95

Total shareholders' equity 24,361 26,018 37,655 38,899 40,423 Net profit margin (%) 4.47 6.67 8.13 7.99 9.28

Total equity & liabilities 43,344 42,932 54,597 58,149 60,319 Core ROA (%) 2.90 3.69 3.50 3.48 4.20

Key Asumtpions Core ROE (%) 5.16 6.09 5.07 5.19 6.27

No. of outstanding shares (mn) 1,124 1,124 1,498 1,498 1,498 Liquidity ratio

Effective capacity (MW) 1,287 1,315 1,338 1,376 1,530 Current ratio (X) 1.80 1.57 2.50 1.73 1.11

Capacity growth (%) n/a 2.2 1.7 2.8 11.2 Quick ratio (X) 1.75 1.50 2.43 1.66 1.05

Leverage Ratio

D/E ratio (X) 0.78 0.65 0.45 0.49 0.49

Net debt/EBITDA (X) 2.29 3.30 1.20 2.48 2.84

Net debt/equity 0.27 0.36 0.12 0.26 0.33

Int. coverage ratio (X) 2.91 4.42 4.69 5.45 5.94

Growth

Revenue (%) n/a -7.59 -0.67 7.63 7.99

EBITDA (%) n/a -1.73 29.40 11.86 12.76

Reported net profit (%) n/a 37.98 21.02 5.82 25.45

Reported EPS (%) n/a 37.98 -9.24 5.82 25.45

Core profit (%) n/a 26.20 20.43 5.82 25.45Core EPS (%) n/a 26.20 -9.68 5.82 25.45


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