On November 2, 2019, Gulf Energy Development Public Company Limited (GULF) had signed a cooperative agreement with Vietnam government for the development of a 6,000MW LNG-to-power project in Ca Na, Ninh Thuan Province, Vietnam, along with an LGN re-gasification terminal with a production capacity of 6 million tonnes per year.
Following the agreement, Bualuang Securities (BLS) had made an analysis on GULF, revising up the target price from ฿160.00/share to ฿200.00/share with a “BUY” rating, despite a “Neutral” outlook on the sector.
BLS stated that it expected the deal to be finalized and inked the Power Purchase Agreement (PPA) during 2020, adding that the fired-gas project worth $7.8bn was proposed to comprise with four 1,500MW units to begin the operation in 2025, 2026, 2027 and 2028.
Vietnam’s Ministry of Industry and Trade had stated that the country will be exposed to a severe power shortage, starting 2021 from the exceeding demand in electricity that expected to generate 6.6bn kWh in 2021 and 15bn kWh in 2023. Due to this reason, BLS believed that Vietnam government would swiftly award PPAs for new power projects. Vietnam’s PDP VII indicated that the country would add gas-fired capacity totaling 6,000MW in 2021-2025 and another 4,000MW in 2026-2030.
Being a company with its investment track record in Vietnam made BLS believed GULF would seal at least half of the proposal (50% stake of the project), while it is also possible that GULF would take 100% of the project as well.
BLS had factored in an additional 3,000MW into its model and upgraded the long-term earnings forecasts in the 16-40% range. The YE20 DCF-derived target price rose from ฿160.00/share to ฿200.00/share. More importantly, BLS expected the preliminary implied addition to its target price would be added by another ฿57.00/share if GULF were to acquire the whole project at 6,000MW.