Thai firm Gunkul to invest RM2b to boost capacity

BANGKOK • Thai renewable company Gunkul Engineering pcl plans to invest at least US$550 million (RM2.28 billion) to more than triple generating capacity under power purchase agreements (PPAs) as demand for green energy climbs.

The plan is to boost such capacity to a minimum of 1,000MW by 2022 from about 280MW currently under operation, by tapping opportunities in Thailand, Cambodia, Malaysia, Japan and Vietnam, CEO Sopacha Dhumrongpiyawut said.

“It will be a very tough challenge, given the uncertainty evident in most state policies, as well as a high level of competition,” she said in an interview in Bangkok on Tuesday.

Thai power producers have stepped up investment in emerging South-East Asian neighbours, drawn by higher rates of economic expansion.

Vietnam, in particular, has emerged as some thing of a hotspot, with firms such as Banpu Power pcl, Gulf Energy Development pcl and B Grimm Power pcl bolstering their footprint in the country.

Gunkul’s current 280MW under PPAs — which means it has long-term buyers for the electricity generated — is mostly solar and wind.

Another 500MW is expected by 2020 through mergers and acquisitions, as well as new deals to sell power to state-run distributors, the biggest buyers in Thailand.

And about 270MW of capacity will come online by 2022, mostly from solar projects in Japan.

Gunkul’s shares have gained 4.4% since the end of June, poised to break a run of six straight quarterly declines. That compares to a 4.8% advance this quarter in the benchmark SET Index.

The challenge for Gunkul is that stiff competition for power purchase contracts in the renewable sector is hurting the industry’s profitability, said Pornsook Amonvadekul, an analyst at Finansia Syrus Securities pcl in Bangkok.

Net income tumbled 96% in the first half (1H) to 11.7 million baht (RM1.48 million).

Sopacha expects 2H earnings to improve, helped by better performance at wind plants in Thailand and the start of solar projects in Japan.

The firm is targeting revenue growth of at least 25% annually this year and next, she said.

Earnings are also expected to jump in the 2H as strong winds have boosted output at the company’s wind farms, MD Somboon Aueatchasai said at an investors’ meeting on Wednesday.

Improving earnings will help bolster the company’s share price, he said. — Bloomberg