WHAUP – Good flow of water and fire (3 October 2022)

We expect earnings in the power business to recover next year as natural gas costs will fall in line with lower oil prices. We expect Duong River to be approved to raise water costs soon. We maintain our BUY rating. WHAT?

3Q22F profits will decline yoy and qoq.

We forecast 3Q22F core business profit of Bt263 million (-4% yoy and -2% qoq) as there is no heavy water user fee income (Bt24 million in 2Q) to increase by 8% qoq as the capacity utilization rate industrial rose to 62.3 percent in the July-August period from 61.1% in 2Q and from increased demand from the Gulf SRC increased production. We expect higher IPP earnings (Geco-One not closed for maintenance) and will offsetting lower SPP earnings (natural gas cost growth, while Ft rises in September). Net profit of 184 million baht (down 10% yoy and qoq) 9M22 core business profit will be 598 million baht (-22% yoy) and account for 73% of FY22F FY22F earnings forecast. We WHAUP will announce results on 11 November

water sales are growing

We expect water sales to increase by 10% next year because there are customers who use a lot of water. (Petrochemical power plant and SPP) and Nghe An Industrial Estate in Vietnam In addition, WHA’s new customers (solar panels, Medical, EV) will use >9 million cubic meters of water per year when the work is complete, from ‘compared to 3 – 5 million m3 in our estimate, thus delivering 3% better than our FY25F earnings forecast. WHAUP raw water costs will be lower and deliver another 3% higher than our FY23F earnings forecast due to new operator raw water price ceilings. (Wongsiam Construction) is reduced by 4% to 10.98 baht / cu.m.

The electricity business will recover from 4Q22 onwards.

Oil prices have fallen since June. From > 100 USD/barrel to current $90/barrel This will lead to lower natural gas costs. (There is a period of six months) which will support the profits of the power business to recover 22% to 847 million baht next year.

The Duong River is expected to be approved to raise water costs soon.

Duong River has applied for approval from the Vietnamese government to raise water costs by 25% to 9,600 VND / m3, and going back to 2019, we expect the company to have a profit of 300 million baht and the operating results of Duong will not River arrives. loss.

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