morning matters · china: pboc says it will ensure stability of money market china’s central bank...

See important disclosures at the end of this report Powered by Enhanced Datasystems’ EFATM

Platform

26-Jun-2013

Morning Matters

EFATxtMacro|

EFATxtRisks|

EFATxtGrowth|

EFATxtValue|

WHAT’S INSIDE

On The Platter

Bank: Weak Corporate Loan Demand (Overweight).The bank sector’s

May balance sheet suggested that corporate investments continued to

remain slow. While domestic economy showed signs of slowdown over the

past two months, lending remained robust in the SME segment. However,

the weak global economy and soft domestic consumption continue to

dampen investment sentiment.

Glow Energy (GLOW TB: FV THB69.7- Neutral (from Buy) Results of

the recent IPP bidding were disappointing for Glow, as Gulf made a clean

sweep of the entire 5,400MW up for grabs. With its GHECO-One shut

down for maintenance and anticipated forex losses, we foresee Glow

posting disappointing 2Q13 earnings. We cut our TP from THB83 to

THB69.7 as we do not expect the stock to outperform the market over the

next 12 months. Downgrade to NEUTRAL.

MEDIA HIGHLIGHTS

Council of State OKs True-CAT partnership.

KBank urges short game on new loans.

GSB expects B20bn in People's loans.

Household debt on upward tilt.

CP: Farm resources an urgent issue.

PTT targets world's first bio-PBS plant.

ECONOMIC HIGHLIGHTS

Thailand: BoT- Be not afraid of China dip.

China: PBOC says it will ensure stability of money market

HK: Exports surprisingly shrink in May

US: Housing prices increased more than forecast in April

US: Consumer confidence increases more than forecast

US: Orders for durable goods rose more than forecast

SET Intra-Day Graph

Source: Bloomberg

Key Market Indices (25 June 2013)

Value Chg % Chg % YTD

SET 1384.63 20.54 1.5% -0.5%

SET50 934.24 17.69 1.9% -1.2%

SET100 2060.76 37.19 1.8% -0.9%

Dow Jones 14760.31 100.75 0.7% 12.6%

S&P500 1588.03 14.94 0.9% 11.3%

Nasdaq 3347.89 27.13 0.8% 10.9%

FTSE 6101.91 72.81 1.2% 3.5%

FSSTI 3089.93 15.62 0.5% -2.4%

Hang Seng 19855.72 41.74 0.2% -12.4%

Nikkei 13141.60 78.82 0.6% 26.5%

KLCI 1728.64 -9.55 -0.5% 2.3%

SHANGHAI SE 1959.51 -3.73 -0.2% -13.6%

JCI 4418.87 -10.59 -0.2% 2.4%

SET 5-yr avg 2012 2013F

PE (x) 14.1 15.9 12.7

P/BV (x) 1.8 2.2 2.1

Yield (%) 4.1 3.1 3.5

Key Statistics

SET Value by investor Type: Daily

Buy (THBm) Sell (THBm) Net (THBm)

Institution 5,847.88 3,352.70 2,495.17

Proprietary 10,726.46 9,490.80 1,235.66

Foreign 11,877.86 14,009.92 -2,132.06

Retail 27,078.53 28,677.30 -1,598.77

SET Value by investor Type

MTD (THBm) YTD (THBm) Institution 28,355.02 69,959.87

Proprietary -6,825.64 -11,212.81

Foreign -49,381.18 -70,473.44

Retail 27,851.80 11,726.38

SET50 Index Future

Long Short Net MTD YTD

Institution 15,911 16,376 -465 6,889 14,742

Foreign 35,901 35,392 509 -3,819 -18,238

Local 25,494 25,538 -44 -3,070 3,496

Foreign Fund Flows (USDm) Last MTD YTD YTD(%) -68.9 -1,603.3 -2,328.6 -227.0

See important disclosures at the end of this report 2

Media Highlights

Council of State OKs True-CAT partnership.

CAT Telecom is preparing to remake 3G network contracts with its concessionaire True Corporation after the Council of State

ruled that their main partnership agreement was in compliance with the law. The new contracts will replace the contentious

existing ones to comply with requirements of the National Broadcasting and Telecommunications Commission (NBTC). The

regulator last June ordered CAT and True to amend six items in their contracts, saying they violated Section 46 of the

Frequency Allocation Act, which requires licence holders and spectrum owners such as CAT to manage spectrum rights on

their own. CAT chief executive Kittisak Sriprasert said the new contracts between CAT and True will be signed once the

cabinet approves the state telecom enterprise's budget of 29 billion baht to continue expanding its 3G network. (Bangkok

Post)

KBank urges short game on new loans.

Kasikornbank (KBank) has advised corporate clients to tap short-term borrowing with a maturity of less than one year amid

high volatility in global financial markets. Short maturities from both bank loans with floating interest rates and corporate

bonds are the preferred borrowing option given the uncertain circumstances of the moment. From May to June, the yield on

the 10-year government bond has risen significantly, even as six-month and one-year yields have remained flat, said

executive vice-president Vasin Vanichvoranun. "On average, yields of short-term bonds are lower than long-term yields by 50-

100 basis points," he said. "So short-term borrowing is a good choice while borrowers take a wait-and-see approach." Prime

lending rates in the commercial banking industry have also been kept on hold despite last month's 25-basis-point cut in the

policy rate to 2.50%.(Bangkok Post)

GSB expects B20bn in People's loans.

The Government Savings Bank (GSB) forecasts around 200,000 to 300,000 individuals will secure loans worth 20 billion baht under the People's Bank project. During the first five months of this year, the bank extended loans totalling 17.9 billion baht to 171,000 accounts, said president Worawit Chalimpamontri. As of May, the project's outstanding credit was 55 billion with non-performing loans of 3.08%. The People's Bank project was initiated by former prime minister Thaksin Shinawatra with the aim of allowing low-income earners access to funds from banks instead of loan sharks. The project charges a flat interest rate of 0.75% per month.(Bangkok Post) Household debt on upward tilt.

Household debt has hit a fresh high, particularly among low-income earners, who remain widely exposed to loan sharks, says the University of the Thai Chamber of Commerce (UTCC). The latest UTCC survey of 1,200 respondents found most of them (64.5%) had average household debt of 188,774.54 baht, up by 12% from a year earlier and compared with 147,542 baht back in 2009. The annual growth rate has risen overall in recent years _ only 2.8% in 2009 and 2.6% in 2010, jumping to 5.3% in 2011 and 5.7% last year before surging 12% in this year's survey. The latest surge is attributed mainly to the higher cost of living, rising tuition and purchases of fixed assets such as homes and vehicles. Thanavath Phonvichai, director of UTCC's Center for Economic and Business Forecasting, said most families have monthly debt repayments averaging 11,671.93 baht, of which 49.6% is in the form of unorganised loans, up from 13.6% a year earlier.(Bangkok Post) CP: Farm resources an urgent issue.

Thai farmers still enjoy a promising future, but the state needs to focus on helping them cut costs by investing more in irrigation development and implementing a farm zoning plan, say executives of the agricultural giant Charoen Pokphand (CP) Group. Montri Congtrakultien, vice-chairman of the group's crop integration business, said rice and oil palms are the most worrisome crops. Once Asean economic integration takes place, they will face stiffer competition from neighbouring countries with lower production costs and more arable land. "We need to come up with a clear-cut zoning policy regarding which crops to promote in each area while educating our farmers in terms of marketing as well as crop disease and insect infestations triggered by climate change," said Mr Montri. "Greater accessibility to technology and sources of funding also needs to be more actively promoted and supported."(Bangkok Post) PTT targets world's first bio-PBS plant.

The energy giant PTT Plc is targeting the second quarter of 2015 for the start of operations at its bio-polybutylene succinate

(PBS) factory, the first of its kind in the world. Sukrit Surabotsopon, the senior executive vice-president for petrochemicals and

refining, said the 2.5-billion-baht plant for bio-PBS, a type of biodegradable plastic, recently began construction. Annual output

will be 20,000 tonnes. Bio-PBS, whose applications are used in industries such as automobiles and textiles, is touted to be

100% degradable in 180 days thanks to a microorganism that turns it into carbon dioxide, soil and water. The facility is located

on 1,500 rai in Map Ta Phut's Asia Industrial Estate, said Mr Sukrit.(Bangkok Post)


Economic Highlights

Orders for US durable goods rose more than forecast in May, reflecting broad-based gains that signal manufacturing is stabilizing. Bookings for goods meant to last at least three years climbed 3.6% for a second month, the Commerce Department reported yesterday. Excluding transportation gear, where demand is volatile month to month, orders advanced 0.7%, also topping projections. The report also showed total sales of durable good climbed 1.2% in May, the biggest gain in six months. That helped curbed inventories, which grew 0.1% last month after expanding 0.3 percent in April. (Bloomberg)

Thailand: BoT- Be not afraid of China dip.

The credit squeeze in China is unlikely to affect Thailand's financial markets, thanks to plentiful liquidity despite recent capital

outflows, says Prasarn Trairatvorakul, governor of the Bank of Thailand. Global markets have seen volatility spike in recent

weeks over concerns about whether the economic slowdown in China could result in a credit crisis. But Mr Prasarn said the

central bank has implemented a defensive strategy in absorbing excessive liquidity, while local financial institutions continue

parking their money at the central bank, implying they still have surplus liquidity to finance their operations. (Bloomberg)

China: PBOC says it will ensure stability of money market

China’s central bank said it will use tools to safeguard stability in money markets and tight liquidity is set to ease, giving the first

official signs of relief for a cash squeeze in the world’s second-largest economy. The People’s Bank of China has provided

liquidity to some financial institutions to stabilize money-market rates and will use short-term liquidity operations and standing

lending-facility tools to ensure steady markets, according to a statement posted to its website yesterday. It also called on

commercial banks to improve their liquidity management. (Bloomberg)

HK: Exports surprisingly shrink in May

Hong Kong recorded an unexpected decline in exports in May, and growth in imports also failed to beat expectations, the

Census and Statistics Department said yesterday. Exports fell by 1% y-o-y to HKD291.5bn in May, marking the first decrease

in three months. Imports rose 1.7% y-o-y to HKD335.8bn, much less than forecast of 3.5 percent growth, and also the 7.7%

surge recorded in April. As a result, a trade deficit of HKD44.3bn was booked in May, higher than HKD42.7bn recorded in

April. (The Standard)

US: Housing prices increased more than forecast in April

Home prices climbed more than forecast in the 12 months through April, rising by the most in more than seven years and

showing further strength in the US housing market. The S&P/Case-Shiller index of property values increased 12.1% from April

2012, the biggest year-over-year gain since March 2006, after advancing 10.9% a month earlier, a report showed yesterday.

Short supply, record-low mortgage rates and an improving job market combined to boost housing demand and spark the

rebound in prices.(Bloomberg)

US: Consumer confidence increases more than forecast

Confidence among US consumers climbed in June to the highest level in more than five years, an indication spending will

probably accelerate after cooling this quarter. The Conference Board’s index rose to 81.4, the highest since January 2008,

from a revised 74.3 in May, data from the New York-based private research group showed yesterday. Rising residential

property values and stock prices, combined with gains in employment, have spurred demand for housing and automobiles as

households gain confidence the expansion will be sustained.(Bloomberg)

US: Orders for durable goods rose more than forecast


Outperform

Current Target Upside/

Recc. Price Price Downside PE (x) Yield (%) Remarks

(Bt) (Bt) (%) 2013f 2013f

ADVANC Buy 263.00 293.00 11.4 21.0 4.8

CPN Buy 44.00 73.00 65.9 15.7 1.5

DTAC Buy 116.00 122.00 5.2 20.8 3.0

INTUCH Trading Buy 81.00 104.00 28.4 17.2 5.3

THAI Buy 23.70 42.60 79.7 11.2 3.3

CPF Buy 23.30 38.00 63.1 28.4 2.4 .

Underperform

Current Target Upside/

Recc. Price Price Downside PE (x) Yield (%) Remarks

(Bt) (Bt) (%) 2013f 2013f

BJC Sell 46.00 57.00 23.9 23.5 1.4

TVO Buy 17.80 28.00 57.3 7.1 9.6

OISHI Sell 124.00 130.00 4.8 36.6 2.8

BIGC Neutral 189.50 198.00 4.5 24.9 1.2

MAJOR Sell 20.60 18.50 -10.2 19.5 4.6

25 24 21 20 19 25 24 21 20 19

1 ADVANC 587.8 129.1 650.8 83.2 159.0 KBANK -1,307.5 -292.5 -902.9 -1,550.7 26.0 INTUCH 5,362.3 KBANK -6,180.0 INTUCH 40,663.0 SCC -7,905.0

2 INTUCH 450.1 1,575.3 56.6 -403.3 511.2 SCB -175.6 -400.7 -648.7 -229.1 175.9 ADVANC 3,199.5 PTTGC -1,710.0 DTAC 11,998.7 BANPU -3,174.1

3 CPN 218.7 224.5 149.2 -108.7 17.0 BAY -159.1 91.0 -449.6 -398.8 -196.6 DTAC 1,836.2 PTT -1,444.0 ADVANC 11,594.8 LH -2,909.2

4 ROBINS 158.4 86.1 220.3 24.4 30.5 CPALL -98.5 -104.7 -118.5 151.2 11.4 MAKRO 1,060.3 BAY -1,429.3 PTTEP 7,686.0 KBANK -1,709.8

5 GLOW 69.9 13.0 45.1 23.9 15.8 LH -88.5 -105.5 -37.0 -166.2 45.4 MINT 562.1 SCC -1,177.4 PTT 6,742.5 SIRI -1,409.5

6 TCAP 50.6 0.6 45.4 -49.5 4.7 BBL -84.1 146.0 -148.7 -663.5 -104.1 ROBINS 553.0 BBL -1,176.8 PTTGC 6,695.6 DEMCO -692.2

7 TUF 43.6 5.6 105.9 -14.3 75.1 SCC -78.7 -61.6 -122.8 -80.9 -24.0 SPALI 413.4 KTB -1,124.8 BAY 6,608.7 CK -600.1

8 TRUE 41.2 -57.5 40.6 -38.1 -143.5 TISCO -77.4 -36.8 11.6 -18.4 -37.6 GLOW 367.3 SCB -944.0 MAKRO 4,188.2 KTB -475.9

9 BIGC 40.3 12.3 26.8 23.9 -13.7 PTT -74.0 -232.3 232.1 -476.8 131.5 CPN 331.0 BGH -926.6 TMB 3,918.7 UV -440.9

10 BANPU 25.7 -28.7 229.2 52.7 -10.7 EGCO -63.5 -7.3 44.0 19.8 -2.2 TUF 313.7 PTTEP -737.5 TOP 3,311.4 BLA -427.9

11 TMB 25.2 14.3 24.7 40.1 -2.9 JAS -48.6 29.4 9.3 25.3 -7.0 BEC 309.9 LPN -658.2 BIGC 3,191.1 IRPC -379.9

12 TICON 25.1 23.2 27.1 -26.6 -15.8 THAI -43.2 14.7 -7.1 52.4 -12.9 DELTA 276.9 AOT -503.8 CPALL 2,840.8 RML -331.0

13 KTB 21.3 -134.9 2.5 -152.3 -304.3 AAV -39.3 41.3 -2.8 -0.4 17.3 THAI 232.1 QH -492.3 THAI 2,652.9 ASP -274.2

14 AOT 21.3 -32.5 69.7 -154.2 51.8 QH -37.4 34.6 -4.7 5.0 3.0 HMPRO 193.9 TISCO -441.3 CPN 2,593.1 QH -270.8

15 LPN 18.8 -8.1 -37.7 -121.8 -44.4 THCOM -33.8 -61.7 5.6 -44.6 -49.7 BIGC 169.2 BTS -401.2 TCAP 2,552.6 MINT-W4 -238.0

16 STEC 18.1 134.5 -14.7 -26.2 -23.9 SPCG -26.1 -0.3 -0.4 -0.9 1.6 THRE 162.0 CPALL -396.2 SPALI 2,544.5 AMATA -208.0

17 BTS 17.7 -18.0 -254.4 -51.0 17.7 TOP -24.1 -30.9 27.0 -109.1 -13.8 BCP 153.1 BLA -351.6 TUF 2,394.6 LRH -197.0

18 SIRI 17.0 4.3 9.4 9.4 65.7 PTTGC -19.7 -15.1 -17.4 -390.7 -259.6 SPCG 150.9 JAS -323.4 MINT 2,372.4 TRC -196.2

19 MAJOR 16.6 11.6 3.3 18.0 3.5 DCC -19.6 2.7 33.0 14.9 -0.9 SIRI 112.5 THCOM -320.0 CPF 2,279.7 STPI -195.3

20 BGH 16.4 -75.8 -85.1 -115.5 -80.7 CPF -18.1 -118.7 217.6 115.6 16.7 GFPT 105.3 SCCC -238.4 BBL 2,082.3 GUNKUL -184.8

% % of % of

Turn. paidup paidup

1 N-PARK 4.50 1 TISCO-P 66.16 65.86

2 LH 42.67 2 BBL 30.60 29.99

3 TRUE 8.28 3 KBANK 28.06 28.50

4 QH 7.44 4 SPALI 22.92 17.94

5 TMB 6.18 5 GOLD-W1 21.50 14.87

6 SIRI 9.93 6 E-W1 21.12 22.27

7 GJS 1.30 7 THRE 20.28 15.50

8 BLAND 1.15 8 INTUCH 19.80 5.41

9 JAS 2.28 9 SPCG-W1 18.56 13.31

10 CPF 18.81 10 LPN 18.22 21.73

11 KBANK 25.15 11 LH 17.52 21.18

12 BAY 15.69 12 TWFP 16.26 24.77

13 PF 23.68 13 DTAC 15.86 13.33

14 HEMRAJ 45.47 14 TCAP 14.69 12.60

15 AIM 1.83 15 BAY 14.57 13.89

16 KTB 4.78 16 THIP 14.50 12.64

17 CPN 34.65 17 AP 14.29 12.92

18 INTUCH 16.11 18 LALIN 13.78 13.53

19 AAV 13.56 19 PRANDA 13.75 14.59

20 BTS 4.39 20 TISCO 13.42 13.69

Source : SET.OR.TH

26 June 2013

Jun13 Jun 13

Total Volume Shares

(Last)

NVDR Shrs. Paid up CapitalNVDR Shrs.

25-Jun-13 2-Jan-13

Net Buy Net Sell Net Buy Net Sell

2 Jan- 25 Jun 133-25 Jun 13

1,908,842,894

237,039,932 271,633,570 22,400 22,300 508,673,502 -34,593,638

20,707,600

33,858

22,259,700 15,048,800 37,308,500

NetBuy Sell Total

8,293,785 22,013,016 30,306,801

572,486,791 -8,804,021

671,558,259 682,155,834

584,087,281 29,511,621 50,219,221

1,716,553,249

7,210,900

418,421,323

2,393,260,193

393,439,192

74,970,598 89,954,203

-13,719,231 307,949,569

347,000,000

20,631,700 9,054,400

14,504,516 -7,026,916

5,618,000 12,066,600 17,684,600 -6,448,600

3,738,800

29,686,100 11,577,300

15,369,525 -8,552,075

26,810,623 5,628,577 73,282,042 77,281,246

10,765,716

3,408,725 11,960,800

16,219,600 10,591,023

3,512,494,860

3,206,420,305

712,250,665 544,461,149

634,928,798 173,363,101

279,999,581

1,475,698,768

51,959,000 37,278,800

268,912,736 320,609,239

2,123,251,472 10,025,921,523 1,756,709,132

1,545,716 2,354,634 9,506,055

406,666,954

825,000,000

8,000,000

408,542,079

59,270,000

1,011,300

2,859,920,138

7,701,500 7,737,100

7,565,100

7,172,500 1,484,843

4,984,300 2,580,800

35,600

8,657,343

99,645,251 727,878,228

8,921,842 5,070,358

113,724,000 111,592,900

55,934,500

97,705,918 2,403,500

-7,665,900

5,687,657

367,964,647

884,854,127 843,803,210

1,159,700 1,110,600

6,074,143,747 9,830,000

-7,524,500

8,196,500

375,444,244 315,525,949 2,367,811,000

1,277,816,397 187,762,680 161,065,653

6,075,313 6,937,490 13,012,803 -862,177

2,483,000 10,007,500 12,490,500

6,996,100 1,925,742

10,804,376

11,638,100

5,499,000 5,305,376

10,230,000200,000

21,000 11,659,100

-4,558,100

-11,617,100

5,627,400

10,030,000

4,516,800 10,144,200

193,624

11,834,9003,638,400

Most Active Volume (shares) NVDR Shares to Total Paid-up Shares(%)

NET BUY NET SELL Month to Date Year to Date

Most Active Values (Btmn)

THAI NVDR : Top Ranking


Platform

Sector Update, 25 June 2013

Banks Overweight

Weak Corporate Loan Demand

Macro

1

Risks

1

Growth

1

Value

1

The bank sector’s May balance sheet suggested that corporate

investments continued to remain slow. While domestic economy

showed signs of slowdown over the past two months, lending remained

robust in the SME segment. However, the weak global economy and soft

domestic consumption continue to dampen investment sentiment.

Loan growth of +0.8% m-o-m, +3.3% YTD; mostly in retail and SME.

Balance sheet in May 2013 suggested that most banks did not shift to

low gear but maintained their growth strategies as usual. On average,

loan growth in May grew by 0.8% m-o-m, 3.3% YTD, and 11.6% y-o-y. In

particular, big banks grew their loan books in the high-yield SME

segment in order to gain better margins, while smaller banks continued to

gain momentum in auto loan. However, corporate loan demand had not

returned despite net repayment over the past 3-4 months.

Sluggish growth for BBL implies weak corporate loan demand.

Bangkok Bank (BBL), which is highly geared towards corporate loan

segment, is the only big bank which had lost loan growth momentum for

four consecutive months, as it reported loan growth of only 0.1% YTD (in

five months). BBL’s weakening loan growth implies sluggish corporate

loan demand, which is in line with the macroeconomic trend of weaker

private investment growth.

Deposit growth outpacing loan growth, led by SCB. Siam

Commercial Bank (SCB) reported strong deposit growth of around 5% m-

o-m, for bridging loan for CPALL for its acquisition of MAKRO.

Meanwhile, Krung Thai Bank (KTB) saw a decline in deposit by around

0.6% m-o-m, whereas Bank of Ayudhya (BAY)’s deposit grew 2.6% m-o-

m and 6.1% YTD, outpacing the growth in loan.

Attractive valuation. Following the share price pullback, the valuation of

Thai banks is very attractive with forward P/E of 9x (20% below long-term

mean P/E) and forward PBV of 1.6x (7% above long-term mean). This

valuation is 32% cheaper than Philippine banks, 24% cheaper than

Malaysian banks, and 16% cheaper than Indonesian banks.

M-o-m loan growth

Source: Bloomberg

YTD loan growth

Source: Bloomberg

Y-o-y loan growth

Source: Bloomberg

Chalie Kueyen 66 2862 9745

[email protected]

|

Source: Company data, RHB Estimates

-0.1%

0.3%0.6%

0.8% 0.9% 1.0% 1.0%1.3%

1.8%

1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

-0.2%

0.1%0.9%

3.0% 3.5%4.8%

5.9%7.3%

10.9%

3.3%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Jun-10

Sep-10

Dec-10

Mar-11

Jun-11

Sep-11

Dec-11

Mar-12

Jun-12

Sep-12

Dec-12

Mar-13

yoy growth

11.6%

Mkt capMkt price FV Fair PBV BV ROE Rec.

USDm 24/6/2013 (THB) (x) '13F '14F '13F '14F '13F '13F '13F '14F '13F '14F 1M 3M 1Y YTD

SCB 16,647 152.5 221.0 2.9 14.5 16.5 22.6 13.9 72.1 20.9 11.1 9.5 2.1 1.9 -18 -13 7 -16 Buy

KBANK 13,125 170.5 254.0 2.9 16.2 18.1 17.4 11.4 90.0 21.0 9.4 8.4 1.9 1.7 -20 -18 6 -12 Buy

BBL 11,266 183.5 290.0 1.7 19.9 22.3 15.2 12.1 163.5 13.5 9.6 8.7 1.1 1.0 -15 -14 1 -6 Buy

KTB 11,949 17.8 32.8 2.2 2.4 2.6 40.3 10.5 14.5 17.5 7.4 6.8 1.2 1.1 -21 -29 24 -9 Buy

BAY 6,935 34.8 41.0 2.0 3.1 3.5 31.9 12.3 20.3 15.4 11.6 10.0 1.7 1.6 -2 4 23 7 Buy

TMB 2,973 2.1 2.9 2.0 0.2 0.2 332.3 16.3 1.5 12.7 13.3 11.2 1.5 1.4 -17 -21 41 14 Buy

TCAP 1,407 36.3 53.5 1.3 6.2 4.7 51.9 24.0- 43.0 13.2 8.4 8.1 0.8 0.8 -23 -17 28 -4 Buy

TISCO 1,082 42.0 55.0 2.0 5.3 6.3 3.2 20.2 27.4 1.3 9.3 8.9 1.5 1.3 -16 -19 18 -15 Neutral

KK 1,356 50.5 79.0 1.8 6.0 7.3 46.0 22.0 45.2 15.6 8.4 6.9 1.1 1.0 -23 -21 47 4 Buy

Price change (%) EPS EPS GWT PE(X) PBV(X)

2

Figure 1: Balance sheet as of May 2013

Interbank

Chg Chg % growth

Unit : Bt mn Dec-12 Mar-13 Apr-13 May-13 MoM YTD MoM YTD YoY

BAY 78,155 98,224 106,250 111,264 5,015 33,109 4.7% 42.4% 33.1%

BBL 305,123 375,228 352,715 346,645 (6,070) 41,522 -1.7% 13.6% 47.7%

KBANK 247,448 282,087 239,025 280,715 41,690 33,267 17.4% 13.4% 90.8%

KTB 332,098 405,519 421,072 384,878 (36,194) 52,781 -8.6% 15.9% 21.1%

SCB 149,541 212,024 215,366 203,438 (11,928) 53,897 -5.5% 36.0% 52.4%

TMB 95,801 100,982 81,958 107,442 25,484 11,641 31.1% 12.2% 21.4%

KK 6,205 7,164 10,083 9,093 (990) 2,888 -9.8% 46.6% -70.5%

TCAP 72,173 45,659 46,411 52,316 5,905 (19,857) 12.7% -27.5% -2.2%

TISCO 31,196 41,625 37,334 28,420 (8,914) (2,776) -23.9% -8.9% 61.2%

Total 985,642 1,162,993 1,089,142 1,139,333 50,191 153,691 4.6% 15.6% 44.3%

Investment

BAY 110,311 113,476 109,606 113,001 3,396 2,690 3.1% 2.4% -10.9%

BBL 431,553 394,480 411,511 401,486 (10,024) (30,067) -2.4% -7.0% 10.4%

KBANK 259,359 209,147 252,729 259,226 6,497 (133) 2.6% -0.1% -4.7%

KTB 295,740 251,870 252,076 267,270 15,194 (28,470) 6.0% -9.6% -5.6%

SCB 374,503 355,923 352,980 405,001 52,021 30,499 14.7% 8.1% 43.5%

TMB 110,673 117,727 128,094 106,947 (21,147) (3,726) -16.5% -3.4% -0.5%

KK 43,852 38,511 34,474 36,481 2,008 (7,371) 5.8% -16.8% -6.2%

TCAP 152,437 141,629 137,923 141,926 4,002 (10,512) 2.9% -6.9% -9.9%

TISCO 7,016 6,703 6,443 5,892 (551) (1,124) -8.5% -16.0% 11.7%

Total 1,489,704 1,377,596 1,433,759 1,469,961 36,202 (19,743) 2.5% -1.3% 8.6%

Loan - net

Dec-12 Mar-13 Apr-13 May-13 chg-MoM chg-YTD % MoM % YTD % YoY

BAY 715,823 714,060 715,330 714,579 (750) (1,243) -0.1% -0.2% 9.4%

BBL 1,484,831 1,471,626 1,471,636 1,485,730 14,094 899 1.0% 0.1% 4.7%

KBANK 1,275,684 1,301,069 1,302,801 1,320,386 17,585 44,702 1.3% 3.5% 9.8%

KTB 1,484,560 1,553,896 1,562,365 1,571,477 9,112 86,917 0.6% 5.9% 9.1%

SCB 1,493,765 1,539,461 1,552,742 1,564,776 12,034 71,010 0.8% 4.8% 17.0%

TMB 427,072 428,645 427,100 430,756 3,656 3,684 0.9% 0.9% 10.6%

KK 164,080 172,607 174,326 176,041 1,715 11,961 1.0% 7.3% 19.6%

TCAP 731,511 747,498 750,897 753,200 2,303 21,689 0.3% 3.0% 18.2%

TISCO 243,547 261,451 265,270 269,991 4,721 26,444 1.8% 10.9% 35.2%

Total 8,020,874 8,190,313 8,222,466 8,286,937 64,470 266,063 0.8% 3.3% 11.6%

Deposits

BAY 692,994 708,060 716,893 735,149 18,257 42,155 2.5% 6.1% 23.7%

BBL 1,774,371 1,778,261 1,776,114 1,777,864 1,750 3,493 0.1% 0.2% 11.4%

KBANK 1,394,536 1,430,659 1,448,951 1,454,989 6,038 60,453 0.4% 4.3% 10.8%

KTB 1,667,374 1,712,123 1,742,850 1,732,556 (10,294) 65,182 -0.6% 3.9% 17.6%

SCB 1,614,589 1,658,157 1,654,966 1,738,084 83,118 123,495 5.0% 7.6% 28.4%

TMB 496,414 496,517 478,060 489,268 11,208 (7,147) 2.3% -1.4% 7.9%

KK 153,532 155,593 156,904 158,140 1,235 4,608 0.8% 3.0% 62.9%

TCAP 693,421 688,315 696,103 692,677 (3,426) (745) -0.5% -0.1% 31.6%

TISCO 219,823 248,914 241,135 234,679 (6,456) 14,855 -2.7% 6.8% 253.4%

Total 6,543,265 6,667,960 6,691,065 6,791,581 100,516 248,315 1.5% 3.8% 22.4%

Deposit & Borrowing

BAY 796,733 794,878 797,211 817,760 20,549 21,027 2.6% 2.6% 7.7%

BBL 1,883,221 1,876,503 1,874,084 1,878,091 4,007 (5,129) 0.2% -0.3% 11.5%

KBANK 1,481,930 1,515,231 1,534,978 1,542,571 7,593 60,640 0.5% 4.1% 10.8%

KTB 1,814,090 1,868,349 1,896,513 1,883,645 (12,868) 69,555 -0.7% 3.8% 10.3%

SCB 1,747,076 1,786,575 1,783,369 1,847,716 64,347 100,640 3.6% 5.8% 21.8%

TMB 539,663 539,313 520,352 530,719 10,367 (8,943) 2.0% -1.7% 4.0%

KK 153,532 182,107 183,703 185,925 2,222 32,393 1.2% 21.1% -1.6%

TCAP 782,927 782,057 788,962 799,582 10,620 16,655 1.3% 2.1% 16.2%

TISCO 247,701 270,830 270,058 267,270 (2,788) 19,570 -1.0% 7.9% 40.0%

Total 7,632,782 7,747,494 7,752,718 7,869,635 116,917 236,853 1.5% 3.1% 13.5%

3

Figure 1 (cont’): Balance sheet as of May 2013

Source: Company data, RHB-OSK Research

Unit : Bt mn Dec-12 Mar-13 Apr-13 May-13 MoM YTD MoM YTD YoY

Equity

BAY 103,739 97,035 95,347 96,608 1,261 (7,131) 1.3% -6.9% 3.3%

BBL 271,498 282,920 277,131 279,285 2,154 7,788 0.8% 2.9% 12.9%

KBANK 175,727 185,183 182,612 185,911 3,299 10,184 1.8% 5.8% 16.5%

KTB 177,692 188,427 185,621 188,956 3,335 11,264 1.8% 6.3% 44.8%

SCB 205,652 217,016 209,185 213,376 4,191 7,724 2.0% 3.8% 13.8%

TMB 53,391 58,813 57,973 58,622 649 5,231 1.1% 9.8% 12.2%

KK 27,459 31,661 30,595 30,772 178 3,314 0.6% 12.1% 31.2%

TCAP 83,790 88,908 87,304 90,000 2,696 6,210 3.1% 7.4% 16.4%

TISCO 18,380 19,528 18,112 18,442 330 62 1.8% 0.3% 15.7%

Total 939,635 981,064 958,259 973,017 14,758 33,382 1.5% 3.6% 13.5%

LDR (include borrowings)

BAY 92% 92% 92% 87%

BBL 79% 78% 79% 79%

KBANK 86% 86% 85% 86%

KTB 82% 83% 82% 83%

SCB 86% 86% 87% 85%

TMB 79% 79% 82% 81%

KK 107% 95% 95% 95%

TCAP 93% 96% 95% 94%

TISCO 98% 97% 98% 101%

Total 89% 88% 88% 88%

4

Figure 2: Thai bank valuation vs. regional bank valuation

Source: Bloomberg

Regional bank valuation and absolute performance comparison Mkt Mkt PBV ROE Div. Yield

B lo o mberg co de Cap Price 1wk 1m 3m 12m YTD '13f '14f '13f '14f '13f '14f '13f '14f '13f '14f '13f '14f

(US$ M N ) Lo cal currency Lo cal curr (%) (%) (x) (x) (x) (x) (%) (%) (%) (%)

Thailand

Bangkok Bank BBL TB 12,368 183.0 -6.5 -33.0 -31.0 1.0 -6.4 19.6 22.0 13.3 12.5 9.3 8.3 1.2 1.1 13.1 13.5 4.1 4.6

Bank of Ayudhya BAY TB 6,659 34.5 2.8 -1.0 1.0 6.3 6.2 3.0 3.5 24.8 18.0 11.5 9.7 1.7 1.5 15.3 16.3 3.2 3.8

Kasikorn Bank KBANK TB 15,271 171.5 -16.0 -42.5 -35.5 11.0 -11.4 17.6 20.4 19.3 16.3 9.8 8.4 1.9 1.6 20.9 20.8 2.2 2.7

Kiatnakin Bank KK TB 1,591 50.0 -4.0 -15.3 -13.8 15.8 3.1 5.7 6.5 16.2 14.6 8.8 7.7 1.2 1.1 14.0 14.9 5.6 6.3

Krung Thai Bank KTB TB 9,284 17.8 -1.8 -4.8 -7.2 3.4 -9.2 2.4 2.7 17.6 15.9 7.6 6.5 1.2 1.1 17.0 17.4 5.2 6.0

Siam Commercial Bank SCB TB 27,859 152.5 -14.5 -33.0 -23.5 10.5 -16.0 14.4 16.6 22.1 15.3 10.6 9.2 2.1 1.8 21.0 20.8 3.3 3.8

Thanachart Capital TCAP TB 1,688 36.5 -4.0 -10.5 -7.0 8.3 -3.3 6.4 5.6 50.1 -13.6 5.7 6.6 0.9 0.8 20.1 13.3 4.4 4.4

TISCO Bank TISCO TB 1,258 39.8 -6.5 -10.5 -11.9 4.2 -23.6 5.6 6.3 17.0 11.8 7.0 6.3 1.4 1.3 22.1 21.3 6.0 6.6

TM B Bank TMB TB 3,139 2.1 0.0 -0.4 -0.5 0.6 15.1 0.2 0.2 328.2 23.4 13.5 11.0 1.5 1.4 11.9 13.3 2.2 3.1

Average 79,116 -5.6 -16.8 -14.4 6.8 -5.1 18.9 15.4 9.3 8.2 1.5 1.3 16.9 17.3 3.6 4.1

Indonesia

Bank Central Asia (BCA) BBCA IJ 24,332 9,150 -9.0 -16.4 -16.1 26.2 7.7 547.8 654.0 14.1 19.4 16.7 14.0 3.7 3.1 23.6 23.7 1.4 1.7

Bank Danamon BDMN IJ 5,212 5,500 0.0 -5.2 -11.3 -7.6 -4.4 463.1 534.0 10.6 15.3 11.9 10.3 1.7 1.5 14.8 15.2 2.5 2.7

PT Bank M andiri Tbk. BMRI IJ 22,205 8,500 -9.6 -15.4 -11.0 21.4 16.7 760.8 894.9 14.5 17.6 11.2 9.5 2.3 1.9 21.6 21.6 2.3 2.6

Bank Pan Indonesia (Panin) PNBN IJ 1,892 720 -8.9 -19.1 -8.9 -6.5 23.8 103.0 122.9 17.7 19.3 7.0 5.9 0.9 0.8 13.5 13.9 0.0 0.0

Bank Rakyat Indonesia BBRI IJ 19,502 7,150 -12.3 -23.1 -16.9 18.2 12.9 811.9 927.7 4.2 14.3 8.8 7.7 2.2 1.8 27.4 25.5 2.6 2.8

Average 75,156 -6.6 -14.5 -13.5 5.7 7.4 12.2 17.2 11.1 9.5 2.1 1.8 20.2 20.0 1.8 2.0

Philippine

Bank of the Philippine Isds BPI PM 7,141 89.0 -2.5 -12.4 -16.0 21.3 -6.3 5.3 5.6 14.8 5.7 16.9 16.0 2.9 2.6 18.2 17.1 2.3 2.4

M etropolitan Bank and Trust MPT PM 5,650 102.5 -13.4 -23.3 -11.5 13.7 0.5 8.2 7.9 16.6 -4.3 12.4 13.0 1.6 1.5 14.5 12.3 1.2 1.3

Union Bank of Philippines UBP PM 2,025 129.0 -8.1 -13.3 4.0 29.1 14.5 12.0 11.9 1.3 -0.6 10.8 10.8 1.5 1.4 16.3 15.1 2.5 2.4

China Banking Corp CHIB PM 2,082 60.1 -12.9 -21.4 -5.9 21.4 10.1 4.4 4.9 13.4 11.2 13.6 12.2 1.7 1.6 12.8 13.2 2.4 2.6

Banco De ORO-EPCI INC BDO PM 6,639 78.0 -4.7 -17.0 -10.8 23.8 7.1 5.2 5.2 16.5 0.1 15.0 15.0 1.7 1.5 12.0 10.6 1.9 1.8

Average 24,107 -8.3 -15.8 -7.8 17.3 3.6 12.5 2.4 13.7 13.4 1.9 1.7 14.8 13.7 2.0 2.1

Malaysia

RHB Captital BHD RHBC MK 6,902 8.5 -2.3 -3.4 -1.1 15.4 10.0 0.8 0.8 -3.4 10.9 11.1 10.0 1.3 1.2 12.2 12.5 2.8 3.0

M alayan Banking BHD MAY MK 28,414 10.0 -4.2 -0.8 8.3 14.8 8.7 0.7 0.8 0.4 6.7 13.7 12.8 1.9 1.8 14.3 14.4 5.3 5.5

Affin Holdings BHD AHB MK 2,001 4.0 -5.7 -2.7 17.9 21.1 15.1 0.4 0.4 -2.3 0.0 9.6 0.0 0.9 0.9 9.9 0.0 3.7 3.9

Public Bank BHD-Foreign M kt PBKF MK 19,113 13.6 -1.9 -0.7 4.0 21.6 2.3 1.1 1.1 6.9 8.0 12.8 11.9 2.0 1.8 15.7 15.2 2.7 2.8

Public Bank PBK MK 19,046 16.7 -2.0 -0.6 4.1 20.9 2.5 1.2 1.3 6.8 10.0 14.1 12.9 2.9 2.6 21.8 21.4 3.1 3.2

Average 83,434 -2.9 -1.9 4.6 17.2 5.1 0.8 0.9 1.7 7.8 12.3 9.5 1.8 1.6 15.0 13.2 3.5 3.7

6/24/2013Last Price

Absolute Performance EPS Growth PER


Platform 1

Company Update, 25 June 2013

Glow Energy (GLOW TB) Neutral (from Buy) Utilities - Electric Target Price: THB69.7

Market Cap: USD3,300m Price: THB70.3

No IPP Awards; Disappointing 2Q13F Expected

Macro

1.00

Risks

1.00

Growth

2.00

Value

2.00

70

76

83

89

96

102

109

115

56

61

66

71

76

81

86

91

Glow Energy (GLOW TB)

Price Close Relative to Stock Exchange of Thailand Index (RHS)

1

1

2

2

3

3

4

4

Ju

n-1

2

Au

g-1

2

Oct-

12

De

c-1

2

Fe

b-1

3

Ap

r-1

3

Vo

l m

Source: Bloomberg

Avg Turnover (THB/USD) 74.5m/2.49m

Cons. Upside (%) 9.5

Upside (%) -0.8

52-wk Price low/high (THB) 59.5 - 86.0

Free float (%) 31

Shareholders (%)

GDF Suez Energy (Thailand) 44.1

GDF Suez Energy (Asia) 25.0

Littledown Nominees 4.6

Shariah compliant

Kannika Siamwalla, CFA 66 2862 9744

[email protected]

Forecasts and Valuations Dec-10 Dec-11 Dec-12 Dec-13F Dec-14F

Total turnover (THBm) 35,657 40,359 57,204 61,353 64,691

Reported net profit (THBm) 5,716 3,494 6,403 7,453 8,825

Recurring net profit (THBm) 5,716 3,494 5,451 7,453 8,825

Recurring net profit growth (%) 36.5 (38.9) 56.0 36.7 18.4

Core EPS (THB) 3.91 2.39 3.73 5.09 6.03

DPS (THB) 1.87 1.97 1.85 2.58 3.05

Dividend Yield (%) 2.7 2.8 2.6 3.7 4.3

Core P/E (x) 18.0 29.4 18.9 13.8 11.6

Return on average equity (%) 17.7 10.3 17.9 19.0 20.4

P/B (x) 3.04 3.00 2.75 2.50 2.26

P/CF (x) 11.9 45.0 6.9 7.4 7.6

EV/EBITDA (x) 18.6 19.2 14.9 9.8 8.6

Net debt to equity (%) 135.3 165.7 140.6 106.5 79.6

Our vs consensus EPS (%) 0.0 0.0

Source: Company data, RHB estimates

Results of the recent IPP bidding were disappointing for Glow, as Gulf made a clean sweep of the entire 5,400MW up for grabs. With its GHECO-One shut down for maintenance and anticipated forex losses, we foresee Glow posting disappointing 2Q13 earnings. We cut our TP from THB83 to THB69.7 as we do not expect the stock to outperform the market over the next 12 months. Downgrade to NEUTRAL.

IPP bidding results a letdown. Gulf Energy Development Co (Gulf)

won the full 5,400MW of electricity-generating capacity solicited in this round of independent power producer (IPP) bidding. We do not expect any major news in the Thai utilities sector that will provide any further positive upside momentum for the utilities stocks under our coverage. Glow had submitted two bids of 1,100MW each. While we had not included this in our valuation of the company, we had expected some upside to its valuation should it win.

Disappointing 2Q13 earnings expected. With its GHECO-One shut

down for 47 days for warranty maintenance and in view of anticipated forex losses, we foresee Glow posting disappointing 2Q13 earnings. Following the warranty maintenance shutdown, GHECO-One is expected to run at optimal levels for the rest of the year. Glow expects to wrap up negotiations for its insurance claims from its contractor after the warranty inspection. Should all go well with the negotiations, Glow should book around USD50m in net profits from the claims later this year, unless the case goes to arbitration.

Downgrade to NEUTRAL. We revise down our TP to THB69.7, from

THB83, as we adjust the discount rate up from 8.23% to 8.40% and growth rate down to 2% from 3%. Our revised TP implies a P/E of 13.7x, with dividend yield of 3.7% for this year, which is comparable to its regional peers. Glow’s share price performance has outperformed its peers over a five-year period. It has only been in the past year that it has lagged against its peers. As we do not expect Glow’s share price to outperform the market over the next 12 months, we downgrade the stock to NEUTRAL.

Glow Energy (GLOW TB) 25 June 2013


Figure 1: Revised DCF valuation assumption

Prior Revised

Cost of debt 6.5% 6.5%

Risk free rate 4.0% 4.0%

Beta 0.72 0.77

Risk premium 8.0% 8.2%

Growth rate 3.0% 2.0%

WACC 8.23% 8.40%

DCF valuation (THB/share) 82.91 69.66 Source: Bloomberg

Figure 2: Regional peer valuation comparison

Name P/E ROE Dvd Yld P/B

Average 15.1 11.4 2.1 1.6

ELECTRICITY GENERATING PCL 7.2 18.3 3.9 1.3

RATCHABURI ELEC GEN HODG PUB 9.6 16.3 - 1.5

GLOW ENERGY PCL 15.8 17.4 3.2 2.6

NEYVELI LIGNITE CORPORATION 7.7 11.7 4.2 0.9

RELIANCE POWER LTD 19.1 5.6 - 1.0

JSW ENERGY LTD 10.1 15.2 3.6 1.5

BEIJING JINGNENG CLEAN ENE-H 16.7 9.0 1.5 1.7

HUADIAN POWER INTL CORP-A 14.2 8.1 2.3 1.1

SHANGHAI ELECTRIC POWER CO-A 10.5 14.2 - 1.4

ZHEJIANG SOUTHEAST ELEC-B 13.7 8.1 - 1.1

INNER MONGOLIA JUNZHENG EN-A 20.1 8.1 0.8 1.6

GUANGXI GUIGUAN ELECTRIC-A 16.7 16.9 - 2.6

CHINA LONGYUAN POWER GROUP-H 18.2 9.4 1.0 1.7

INFRATIL LTD 20.3 0.3 3.6 1.3

SHANXI ZHANGZE ELEC POWER-A 16.6 14.2 - 2.0

XINJIANG TIANFU THERMOELE-A 24.6 8.8 - 2.3 Source: Bloomberg

Figure 3: Regional peer performance

Name 1 Month 3 Months 6 Months 1 Year 3 Years 5 Years

Average 4.5 (9.7) (0.5) 4.0 (1.0) 0.2

ELECTRICITY GENERATING PCL 2.3 (12.7) (5.9) 20.1 24.0 17.5

RATCHABURI ELEC GEN HODG PUB (7.2) (15.4) (12.1) 20.1 18.0 9.9

GLOW ENERGY PCL (9.1) (9.1) (4.7) 14.2 27.6 24.7

NEYVELI LIGNITE CORPORATION (9.4) (16.9) (32.3) (31.8) (27.6) (10.6)

RELIANCE POWER LTD (5.1) 1.1 (33.2) (38.2) (28.3) (16.6)

JSW ENERGY LTD (16.5) (21.8) (36.3) (15.9) (30.3) N/A

BEIJING JINGNENG CLEAN ENE-H 27.8 12.0 83.5 71.6 N/A N/A

HUADIAN POWER INTL CORP-A (1.3) (31.0) (19.8) (24.0) (6.8) (9.8)

SHANGHAI ELECTRIC POWER CO-A 10.9 (14.9) (8.6) (25.0) 0.2 (2.9)

ZHEJIANG SOUTHEAST ELEC-B 8.2 1.2 35.0 46.5 16.6 1.1

INNER MONGOLIA JUNZHENG EN-A 17.0 4.3 17.4 (1.1) N/A N/A

GUANGXI GUIGUAN ELECTRIC-A 19.1 (8.2) (16.1) (17.5) (9.0) (7.2)

CHINA LONGYUAN POWER GROUP-H 13.1 1.2 41.3 46.9 0.5 N/A

INFRATIL LTD (4.7) (7.3) (3.5) 11.0 15.7 7.6

SHANXI ZHANGZE ELEC POWER-A (5.1) (29.7) (14.0) (17.7) (9.3) (10.1)

XINJIANG TIANFU THERMOELE-A 32.2 (7.3) 2.0 4.7 (4.7) (0.6) Source: Bloomberg, RHB estimates

Revised TP with slightly higher WACC and lower growth rate

Valuations are comparable to regional peers

In terms of annual performance, both Glow and Electricity Generating PCL (EGCO) have outperformed peers



Financial Exhibits

Profit & Loss (THBm) Dec-10 Dec-11 Dec-12 Dec-13F Dec-14F

Total turnover 35,657 40,359 57,204 61,353 64,691

Cost of sales (29,059) (33,570) (48,303) (48,191) (50,471)

Gross profit 6,598 6,789 8,901 13,162 14,221

Gen & admin expenses (501) (708) (1,309) (1,571) (1,638)

Operating profit 6,097 6,081 7,591 11,591 12,582

Operating EBITDA 8,984 9,498 11,985 17,044 18,035

Depreciation of fixed assets (2,886) (3,417) (4,394) (5,453) (5,453)

Operating EBIT 6,097 6,081 7,591 11,591 12,582

Net income from investments - (0) (0) - -

Other recurring income 494 599 61 - -

Interest income 74 126 90 432 642

Interest expense (1,487) (1,679) (2,354) (2,990) (2,842)

Exchange gains 1,654 (854) 661 - -

Exceptional income - net - - 1,056 - -

Pre-tax profit 6,832 4,274 7,106 9,034 10,382

Taxation (615) (925) (704) (1,581) (1,557)

Minority interests (502) 145 - - -

Profit after tax & minorities 5,716 3,494 6,403 7,453 8,825

Reported net profit 5,716 3,494 6,403 7,453 8,825

Recurring net profit 5,716 3,494 5,451 7,453 8,825


Cash flow (THBm) Dec-10 Dec-11 Dec-12 Dec-13F Dec-14F

Operating profit 6,097 6,081 7,591 11,591 12,582

Depreciation & amortisation 2,886 3,417 4,394 5,453 5,453

Change in working capital 1,191 (5,338) 5,809 1,050 (721)

Other operating cash flow 494 599 61 - -

Operating cash flow 10,669 4,760 17,856 18,094 17,313

Interest received 74 126 90 432 642

Interest paid (1,487) (1,679) (2,354) (2,990) (2,842)

Tax paid (615) (925) (704) (1,581) (1,557)

Cash flow from operations 8,641 2,283 14,889 13,956 13,556

Capex (24,046) (13,331) (6,933) 738 (0)

Other new investments (26) (300) 48 - -

Other investing cash flow 3,843 (747) 446 (1,294) (673)

Cash flow from investing activities (20,229) (14,377) (6,439) (557) (673)

Dividends paid (2,611) (2,742) (2,879) (2,705) (3,770)

Proceeds from issue of shares (137) (147) (595) - -

Increase in debt 14,112 11,875 (316) 6,517 (5,304)

Other financing cash flow - 0 - - -

Cash flow from financing activities 11,364 8,986 (3,790) 3,812 (9,075)

Cash at beginning of period 7,137 8,704 4,889 11,861 29,073

Total cash generated (224) (3,109) 4,660 17,212 3,808

Forex effects 1,654 (854) 661 - -

Implied cash at end of period 8,567 4,741 10,210 29,073 32,881




Financial Exhibits

Balance Sheet (THBm) Dec-10 Dec-11 Dec-12 Dec-13F Dec-14F

Total cash and equivalents 10,453 8,684 12,996 30,207 34,015

Inventories 2,448 4,434 4,880 3,725 3,928

Accounts receivable 3,546 4,965 8,781 7,991 8,426

Other current assets 1,270 2,330 649 1,543 1,627

Total current assets 17,717 20,412 27,305 43,466 47,996

Total investments 2 2 2 3 3

Tangible fixed assets 88,317 98,230 100,770 94,579 89,126

Total other assets 1,291 1,590 1,542 1,542 1,542

Total non-current assets 89,609 99,823 102,314 96,124 90,671

Total assets 107,326 120,235 129,619 139,590 138,667

Short-term debt 3,819 5,858 11,180 13,213 17,213

Accounts payable 3,085 3,667 11,822 11,822 11,822

Other current liabilities 2,706 3,297 872 872 872

Total current liabilities 9,610 12,822 23,874 25,907 29,907

Total long-term debt 57,989 67,825 62,187 66,671 57,367

Other liabilities 1,775 356 610 382 402

Total non-current liabilities 59,764 68,181 62,797 67,053 57,769

Total liabilities 69,374 81,003 86,671 92,960 87,676

Share capital 14,629 14,629 14,629 14,629 14,629

Retained earnings reserve 16,220 16,688 19,790 23,473 27,833

Other reserves 2,935 2,935 2,935 2,935 2,935

Shareholders' equity 33,784 34,252 37,355 41,037 45,397

Minority interests 4,168 4,980 5,594 5,593 5,593

Total equity 37,952 39,232 42,948 46,630 50,991

Total liabilities & equity 107,326 120,235 129,619 139,590 138,667


Key Ratios (THB) Dec-10 Dec-11 Dec-12 Dec-13F Dec-14F

Revenue growth (%) 3.3 13.2 41.7 7.3 5.4

Operating profit growth (%) 23.7 (0.3) 24.8 52.7 8.5

Net profit growth (%) 36.5 (38.9) 83.3 16.4 18.4

EPS growth (%) 36.5 (38.9) 83.3 16.4 18.4

Bv per share growth (%) 9.2 1.4 9.1 9.9 10.6

Operating margin (%) 17.1 15.1 13.3 18.9 19.4

Net profit margin (%) 16.0 8.7 11.2 12.1 13.6

Return on average assets (%) 6.0 3.1 5.1 5.5 6.3

Return on average equity (%) 17.7 10.3 17.9 19.0 20.4

Net debt to equity (%) 135.3 165.7 140.6 106.5 79.6

DPS 1.87 1.97 1.85 2.58 3.05

Recurrent cash flow per share 5.9 1.6 10.2 9.5 9.3




SWOT Analysis

Reputation in marketplace is strong, with high corporate governance.

Strong major shareholder in GDF Suez.

Other players in the market are well connected within the Government and Government agencies.

Through its parent company, it has global reach but is a local player with highly qualified management team.

Government connections may be lacking.

-60%

-37%

-14%

9%

31%

54%

77%

100%

0

5

10

15

20

25

30

35

Jan

-10

Jan

-11

Jan

-12

Jan

-13

Jan

-14

P/E (x) vs EPS growth

P/E (x) (lhs) EPS growth (rhs)

0%

4%

7%

11%

14%

18%

21%

25%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Jan

-10

Jan

-11

Jan

-12

Jan

-13

Jan

-14

P/BV (x) vs ROAE

P/B (x) (lhs) Return on average equity (rhs)

Source: Company data, RHB estimates Source: Company data, RHB estimates

Company Profile Glow Energy has a total power generating capacity of 3,530MWe. It has both independent power producers (IPPs) and several small power producers (SPPs) in Thailand selling electricity and steam to industrial customers and the Electricity Generating Authority of Thailand (EGAT). Its power plants use both natural gas and coal as fuel.



Recommendation Chart

11

21

31

41

51

61

71

81

91

Jun-08 Oct-09 Jan-11 Apr-12

Price Close

NR

66.9

83.0

82.9

Recommendations & Target Price

Buy Neutral Sell Trading Buy Take Profit Not Rated

Source: RHB estimates, Bloomberg

Date Recommendation Target Price Price

2013-05-20 Buy 82.9 72.5

2012-11-09 Buy 83.0 70.8

2012-08-01 Neutral 66.9 60.5

Source : RHB estimates, Bloomberg

5

RHB Guide to Investment Ratings Buy: Share price may exceed 10% over the next 12 months Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain Neutral: Share price may fall within the range of +/- 10% over the next 12 months Take Profit: Target price has been attained. Look to accumulate at lower levels Sell: Share price may fall by more than 10% over the next 12 months Not Rated: Stock is not within regular research coverage Disclosure & Disclaimer All research is based on material compiled from data considered to be reliable at the time of writing, but RHB does not make any representation or warranty, express or implied, as to its accuracy, completeness or correctness. No part of this report is to be construed as an offer or solicitation of an offer to transact any securities or financial instruments whether referred to herein or otherwise. This report is general in nature and has been prepared for information purposes only. It is intended for circulation to the clients of RHB and its related companies. Any recommendation contained in this report does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This report is for the information of addressees only and is not to be taken in substitution for the exercise of judgment by addressees, who should obtain separate legal or financial advice to independently evaluate the particular investments and strategies. RHB, its affiliates and related companies, their respective directors, associates, connected parties and/or employees may own or have positions in securities of the company(ies) covered in this research report or any securities related thereto, and may from time to time add to, or dispose off, or may be materially interested in any such securities. Further, RHB, its affiliates and related companies do and seek to do business with the company(ies) covered in this research report and may from time to time act as market maker or have assumed an underwriting commitment in securities of such company(ies), may sell them or buy them from customers on a principal basis and may also perform or seek to perform significant investment banking, advisory or underwriting services for or relating to such company(ies), as well as solicit such investment, advisory or other services from any entity mentioned in this research report. RHB and its employees and/or agents do not accept any liability, be it directly, indirectly or consequential losses, loss of profits or damages that may arise from any reliance based on this report or further communication given in relation to this report, including where such losses, loss of profits or damages are alleged to have arisen due to the contents of such report or communication being perceived as defamatory in nature. The term “RHB” shall denote where applicable, the relevant entity distributing the report in the particular jurisdiction mentioned specifically herein below and shall refer to RHB Research Institute Sdn Bhd, its holding company, affiliates, subsidiaries and related companies. All Rights Reserved. This report is for the use of intended recipients only and may not be reproduced, distributed or published for any purpose without prior consent of RHB and RHB accepts no liability whatsoever for the actions of third parties in this respect. Malaysia This report is published and distributed in Malaysia by RHB Research Institute Sdn Bhd (233327-M), Level 11, Tower One, RHB Centre, Jalan Tun Razak, 50400 Kuala Lumpur, a wholly-owned subsidiary of RHB Investment Bank Berhad (RHBIB), which in turn is a wholly-owned subsidiary of RHB Capital Berhad. Singapore This report is published and distributed in Singapore by DMG & Partners Research Pte Ltd (Reg. No. 200808705N), a wholly-owned subsidiary of DMG & Partners Securities Pte Ltd, a joint venture between Deutsche Asia Pacific Holdings Pte Ltd (a subsidiary of Deutsche Bank Group) and OSK Investment Bank Berhad, Malaysia which have since merged into RHB Investment Bank Berhad (the merged entity is referred to as “RHBIB”, which in turn is a wholly-owned subsidiary of RHB Capital Berhad). DMG & Partners Securities Pte Ltd is a Member of the Singapore Exchange Securities Trading Limited. DMG & Partners Securities Pte Ltd may have received compensation from the company covered in this report for its corporate finance or its dealing activities; this report is therefore classified as a non-independent report. As of 26 June 2013, DMG & Partners Securities Pte Ltd and its subsidiaries, including DMG & Partners Research Pte Ltd do not have proprietary positions in the securities covered in this report, except for: a) - As of 26 June 2013, none of the analysts who covered the securities in this report has an interest in such securities, except for: a) - Special Distribution by RHB Where the research report is produced by an RHB entity (excluding DMG & Partners Research Pte Ltd) and distributed in Singapore, it is only distributed to "Institutional Investors", "Expert Investors" or "Accredited Investors" as defined in the Securities and Futures Act, CAP. 289 of Singapore. If you are not an "Institutional Investor", "Expert Investor" or "Accredited Investor", this research report is not intended for you and you should disregard this research report in its entirety. In respect of any matters arising from, or in connection with this research report, you are to contact our Singapore Office, DMG & Partners Securities Pte Ltd. Hong Kong This report is published and distributed in Hong Kong by RHB OSK Securities Hong Kong Limited (“RHBSHK”) (formerly known as OSK Securities Hong Kong Limited), a subsidiary of OSK Investment Bank Berhad, Malaysia which have since merged into RHB Investment Bank Berhad (the merged entity is referred to as “RHBIB”), which in turn is a wholly-owned subsidiary of RHB Capital Berhad. RHBSHK, RHBIB and/or other affiliates may beneficially own a total of 1% or more of any class of common equity securities of the subject company. RHBSHK, RHBIB and/or other affiliates may, within the past 12 months, have received compensation and/or within the next 3 months seek to obtain compensation for investment banking services from the subject company.

6

Risk Disclosure Statements The prices of securities fluctuate, sometimes dramatically. The price of a security may move up or down, and may become valueless. It is as likely that losses will be incurred rather than profit made as a result of buying and selling securities. Past performance is not a guide to future performance. RHBSHK does not maintain a predetermined schedule for publication of research and will not necessarily update this report Indonesia This report is published and distributed in Indonesia by PT RHB OSK Securities Indonesia (formerly known as PT OSK Nusadana Securities Indonesia), a subsidiary of OSK Investment Bank Berhad, Malaysia, which have since merged into RHB Investment Bank Berhad, which in turn is a wholly-owned subsidiary of RHB Capital Berhad. Thailand This report is published and distributed in Thailand by RHB OSK Securities (Thailand) PCL (formerly known as OSK Securities (Thailand) PCL), a subsidiary of OSK Investment Bank Berhad, Malaysia, which have since merged into RHB Investment Bank Berhad, which in turn is a wholly-owned subsidiary of RHB Capital Berhad. Other Jurisdictions In any other jurisdictions, this report is intended to be distributed to qualified, accredited and professional investors, in compliance with the law and regulations of the jurisdictions.

Kuala Lumpur Hong Kong Singapore

Malaysia Research Office

RHB Research Institute Sdn Bhd Level 11, Tower One, RHB Centre

Jalan Tun Razak Kuala Lumpur

Malaysia Tel : +(60) 3 9280 2185 Fax : +(60) 3 9284 8693

RHB OSK Securities Hong Kong Ltd.

(formerly known as OSK Securities Hong Kong Ltd.) 12

th Floor

World-Wide House 19 Des Voeux Road Central, Hong Kong

Tel : +(852) 2525 1118 Fax : +(852) 2810 0908

DMG & Partners

Securities Pte. Ltd. 10 Collyer Quay

#09-08 Ocean Financial Centre Singapore 049315

Tel : +(65) 6533 1818 Fax : +(65) 6532 6211

Jakarta Shanghai Phnom Penh

PT RHB OSK Securities Indonesia

(formerly known as PT OSK Nusadana Securities Indonesia)

Plaza CIMB Niaga 14th Floor

Jl. Jend. Sudirman Kav.25 Jakarta Selatan 12920, Indonesia

Tel : +(6221) 2598 6888 Fax : +(6221) 2598 6777

RHB OSK (China) Investment Advisory Co. Ltd.

(formerly known as OSK (China) Investment Advisory Co. Ltd.)

Suite 4005, CITIC Square 1168 Nanjing West Road

Shanghai 20041 China

Tel : +(8621) 6288 9611

RHB OSK Indochina Securities Limited

(formerly known as OSK Indochina Securities Limited) No. 1-3, Street 271

Sangkat Toeuk Thla, Khan Sen Sok Phnom Penh

Cambodia Tel: +(855) 23 969 161 Fax: +(855) 23 969 171

Bangkok

RHB OSK Securities (Thailand) PCL

(formerly known as OSK Securities (Thailand) PCL) 10th Floor, Sathorn Square Office Tower

98, North Sathorn Road,Silom Bangrak, Bangkok 10500

Thailand Tel: +(66) 862 9999 Fax : +(66) 108 0999

morning matters · china: pboc says it will ensure stability of money market china’s central bank...

Documents