Morning Matters - RHB TradeSmart...The SET-listed developer Noble Development Plc plans to resume single-house development with a new project in northern Bangkok next year. "We have

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5-Sep-2013

Morning Matters

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WHAT’S INSIDE

On The Platter

Glow Energy (GLOW TB; FVTHB69.5-Neutral (Maintained): Trimming Earnings Estimates And TP

We nudge down our earnings estimates and TP as we fine-tune our assumptions for natural gas and coal costs. We expect Gheco-One (Glow‟s largest IPP) to run at full capacity by end-September vs 87% currently, once its technical issues are resolved. We expect Glow to benefit from the weakening THB/USD, as its power plants are USD-linked to some extent. Maintain NEUTRAL, with a lower THB69.50 TP.

MEDIA HIGHLIGHTS

KBank sees weak demand for investment finance

BoT wary of consumer lending

Noble plans return to single-house projects

Purple Line deal agreed

Commerce: Economy to improve in H2

RS spending Bt350m for Channel 8 HD broadcasts

ECONOMIC HIGHLIGHTS

China: China Record Drop in Credit Growth Puts Momentum at Risk

India: Rajan Brings Global Stature to RBI Hamstrung by India‟s Deficits

U.S.: Fed Says „Modest to Moderate‟ Growth Aided by Homes, Cars

Russia: G-20 Draft Urges Job Training, Infrastructure Spending

U.S.: Widening Trade Gap Signals Improving U.S. Demand: Economy

Canada: Canada Keeps Policy Rate at 1% on Delayed Export Recovery

SET Intra-Day Graph

Source: Bloomberg

Key Market Indices (4 September 2013)

Value Chg % Chg % YTD

SET 1303.21 -12.20 -0.9% -6.4%

SET50 889.33 -8.80 -1.0% -5.9%

SET100 1950.62 -19.95 -1.0% -6.2%

Dow Jones 14930.87 96.91 0.7% 13.9%

S&P500 1653.08 13.31 0.8% 15.9%

Nasdaq 3649.04 36.43 1.0% 20.8%

FTSE 6474.74 6.33 0.1% 9.8%

FSSTI 3015.42 -39.36 -1.3% -4.8%

Hang Seng 22326.22 -68.36 -0.3% -1.5%

Nikkei 14114.47 212.95 1.5% 35.9%

KLCI 1716.76 -7.45 -0.4% 1.6%

SHANGHAI SE 2127.62 4.51 0.2% -6.2%

JCI 4073.46 -90.56 -2.2% -5.6%

SET 5-yr avg 2012 2013F

PE (x) 13.8 14.3 12.7

P/BV (x) 1.8 2.0 2.0

Yield (%) 4.1 3.3 3.6

Key Statistics

SET Value by investor Type: Daily

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

Institution 3,097.71 2,355.86 741.85

Proprietary 6,348.80 7,698.41 -1,349.61

Foreign 8,611.94 8,999.35 -387.41

Retail 15,167.31 14,172.15 995.16

SET Value by investor Type

MTD (THBm) YTD (THBm) Institution 3,176.58 74,444.11

Proprietary -2,111.08 -12,921.31

Foreign -490.36 -116,515.68

Retail -575.14 54,992.88

SET50 Index Future

Long Short Net MTD YTD

Institution 11,594 10,595 999 2,295 22,736

Foreign 5,869 6,136 -267 41 -21,730

Local 14,010 14,742 -732 -2,336 -1,006

Foreign Fund Flows (USDm) Last MTD YTD YTD(%)

-12.0 -15.3 -3,781.9 -283.2

See important disclosures at the end of this report 2

Media Highlights

KBank sees weak demand for investment finance

Kasikornbank (KBank), Thailand's fourth-largest lender by assets, recorded flat growth for financing manufacturing projects this year, reflecting weak demand for new investment amid the local and global economic slowdown. The anaemic demand was attributed to China's policy of cooling down its gross domestic product (GDP) growth to a single-digit rate this year coupled with Thailand's economic doldrums. Thailand's capacity utilisation has been steady at 65% from the end of last year, below the usual rate of 70% in a normal economic situation. Executive vice-president Vasin Vanichvoranun said capacity utilisation surged to 75-80% before the devastating floods in 2011 thanks to the double-digit growth of China's economy. Delays to several investment projects, especially the 350-billion-baht water management project and digital-TV auction, and uncertainty over the 2-trillion-baht infrastructure investment, have hurt investors' confidence and affected manufacturing loans. (Bangkok Post) BoT wary of consumer lending

The Bank of Thailand's Monetary Policy Committee (MPC) is concerned about auto loan defaults and car-for-cash loans as consumer debt swells, opting to keep its policy interest rate at 2.5% for the time being. The MPC voted six to one to maintain the 2.5% interest rate at its Aug 21 meeting, believing it would encourage economic growth while further easing its monetary policy could lead to a build-up of financial imbalances. The one dissenting member wanted the policy rate cut by 0.25 percentage points, arguing it would help boost economic expansion next year. The central bank trimmed its 2013 GDP growth forecast in July to 4.2% from 5.1% while maintaining its 2014 GDP growth estimate at 5%. Earlier, the National Economic and Social Development Board and the Finance Ministry's Fiscal Policy Office also predicted economic growth of 4% this year. Thailand reported lower-than-expected economic growth of 5.3% year-on-year for the first quarter and 2.8% for the second quarter, as domestic consumption and private investment waned while global demand was limp. (Bangkok Post) Noble plans return to single-house projects

The SET-listed developer Noble Development Plc plans to resume single-house development with a new project in northern Bangkok next year. "We have been absent from the single-house market for the past five years, as land prices soared too high," said vice-president Theeraphon Voranithiphong. But he said land prices have cooled and are now stable. Next year will also see Noble enter the low-end condo segment for the first time. It plans to launch a project in northern Bangkok with 700-800 units priced less than 2 million baht. Chief executive Kitti Thanakitamnuay said both projects will target customers who are independent and highly self-confident. On Sept 29, Noble will launch Noble Revolve Ratchada 2, a condo project worth 2.8 billion baht with 755 units sized 22-50 square metres. Prices will range from 2.6 million to 7 million baht or 130,000 baht per sq m. It will be located on three rai near the Thailand Cultural Center subway station, where it launched Noble Revolve Ratchada 1 early this year. That project is now 90% sold. Land prices on Ratchadaphisek Road have soared 40% over the past two years to 700,000 baht per sq wah. (Bangkok Post) Purple Line deal agreed

Bangkok Metro Plc (BMCL), the SET-listed subway operator, expects construction of the Purple Line extension will be up and running 40 months from now, two years behind the original schedule of 2015. "The concession is expected to be completed within 40 months, but we hope it will be sooner than that," said executive chairman Plew Trivisvavet. The 2011 flood crisis delayed construction, pushing the date back to 2017. Mr Plew said the line could be completed 3-6 months earlier, but that would boost the cost. BMCL, which operates 20 kilometres of subway trains and 18 stations from Hua Lamphong to Bang Sue, yesterday signed an 82.6-billion-baht contract with the Mass Rapid Transit Authority of Thailand (MRTA) for the procurement, installation, operation and maintenance of the Purple Line. The route is expected to boost ridership by another 200,000 per day on the subway, which started in 2004. (Bangkok Post) Commerce: Economy to improve in H2

A meeting of economic ministers has agreed the economy will show improved growth in the third and fourth quarters of the year, Commerce Minister Niwatthamrong Boonsongpaisal said on Wednesday. The meeting had discussed the economic trend for the remaining months of the year after a slowdown in the second quarter blamed on the fragility of the global economy, he said. The economy in the second half of the year would gradually improve on the back of a speeding up of the disbursement of the remaining 2013 budget of about 80 billion baht within the end of this month, he added. Mr Niwatthamrong said the government will also propose its 2-trillion-baht borrowing bill to the House of Representatives for consideration by mid-September. The meeting would aim at boosting the sector after exports grew by only 2.47% over the first eight months of the year, he added. (Bangkok Post) RS spending Bt350m for Channel 8 HD broadcasts

RS IS BEEFING up its Channel 8 business by spending Bt350 million on acquiring new technologies and upgrading its station

for high-definition broadcasting. "Channel 8 was upgraded to HD on August 17," CEO Surachai Chetchotisak said yesterday.

About Bt50 million would be used in the upgrading of production and broadcasting equipment and Bt300 million in the

production of 15 mega-budget TV series. This year, RS' media business is expected to contribute more than Bt2 billion. The

company aims to continue dominating satellite TV ratings. Since the launch of the company's satellite TV business, five

channels have been introduced - Channel 8, Sabaidee TV, U Channel, Starmax and Sun Channel. Channel 8 was launched

on January 5, 2011 as a 24-hour, free-TV variety channel. (The Nation)


Economic Highlights

China: China Record Drop in Credit Growth Puts Momentum at Risk

China‟s leaders are extending a clampdown on credit, prompting analysts from JPMorgan Chase & Co. to Societe Generale SA to caution that the economy is vulnerable to weakening after the pickup so far this quarter. New yuan loans were probably little changed in August, after aggregate financing, the broadest measure of credit, posted a fourth straight drop in July, the longest streak in 11 years of data. Analysts‟ median estimates point to the fastest industrial-output gain since December and the slowest producer-price decline in six months. The moderation in credit after a record first-quarter financing boom stands to cap an economic rebound being driven by a recovery in confidence and Premier Li Keqiang‟ssupport measures, such as faster spending on railways. Overcapacity and pressure to clean up debt loom as challenges, according to JPMorgan, which sees growth slowing to 7.2 percent in 2014 from 7.6 percent this year. (Bloomberg) India: Rajan Brings Global Stature to RBI Hamstrung by India’s Deficits

India‟s newly installed central bank Governor Raghuram Rajan burnished his international credentials at a 2005 U.S. conference warning about the danger of a potential crisis. Now he has one of his own to contend with. Rajan, 50, yesterday took office as the 23rd chief of the Reserve Bank of India, putting him on the front lines of his nation‟s battle to forestal l a record slump in the rupee, reverse dwindling growth rates and rein in inflation hammering 826 million citizens who live on less than $2 a day. With mandates ranging from price stability to ensuring credit flows, the ex-International Monetary Fund chief economist inherits multiple goals with limited power to achieve them. A narrower focus on inflation, along with government action to shrink a fiscal deficit and boost infrastructure, would help as emerging-market turbulence exposes India‟s fragilities, according to Rajan‟s former IMF colleague Eswar Prasad. (Bloomberg) U.S.: Fed Says ‘Modest to Moderate’ Growth Aided by Homes, Cars

Americans spending more on cars and housing helped the economy maintain a “modest to moderate” pace of expansion from early July through late August, even as borrowing costs increased, the Federal Reserve said today. Manufacturing expanded “modestly” and consumers spent more on travel and tourism, the Fed said today in its Beige Book business survey, which is based on anecdotal reports from its 12 districts. Hiring “held steady or increased modestly.” The Federal Open Market Committee is debating whether growth is sufficient to fuel steady improvement in the job market and warrant tapering the Fed‟s $85 billion in monthly bond buying. Speculation the FOMC will dial down purchases at its Sept. 17-18 meeting has roiled financial markets, pushing up U.S. bond yields and contributing to the worst rout in the currencies of developing nations in five years. (Bloomberg) Russia: G-20 Draft Urges Job Training, Infrastructure Spending

Leaders of the Group of 20 meeting in Russia will consider endorsing a strategy for long-term economic growth that emphasizes steps such as infrastructure spending and job training, according to Bloomberg BNA. Growth prospects for 2013 “have been marked down repeatedly over the last year, regional growth disparities remain wide, and unemployment, particularly among youth, remains unacceptably high,” according to a draft of the so-called action plan to be considered at the meeting today and tomorrow in St. Petersburg and obtained by Bloomberg BNA. “The recovery is too weak, and risks remain tilted to the downside.”The draft marks a shift from strategies adopted at previous summits, which emphasized coordinated monetary and fiscal policies to spur the global economy, according to Bloomberg BNA. (Bloomberg) U.S.: Widening Trade Gap Signals Improving U.S. Demand: Economy

The trade deficit in the U.S. widened in July from an almost four-year low as Americans imported more fuel and automobiles, showing the world‟s largest economy is picking up. The gap increased 13.3 percent to $39.1 billion from $34.5 billion in June that was the smallest since October 2009, the Commerce Department reported today in Washington. Purchases from abroad climbed 1.6 percent, while sales of American goods to foreign buyers cooled to the second-highest on record. Imports will probably keep rising, reflecting improving demand and a jump in crude-oil prices as tensions mount in the Middle East. At the same time, a strengthening U.S. expansion is helping companies in the European Union and China boost sales, which will stabilize global growth and, in turn, improve prospects for American exports. (Bloomberg) Canada: Canada Keeps Policy Rate at 1% on Delayed Export Recovery

Bank of Canada Governor Stephen Poloz kept his main interest rate unchanged and reiterated that current monetary policy remains appropriate as an expected rotation of demand to exports and investment is being delayed. Policy makers kept the benchmark rate on overnight loans between commercial banks at 1 percent for the 24th consecutive meeting and said slack in the economy will start to disappear in 2014. The decision from Ottawa was forecast by all 22 economists in a Bloomberg News survey. Business spending and exports have slowed the expansion of the world‟s 11th largest economy this year even with recent signs of stronger growth in the U.S. and Europe. Consumer spending has continued to lead growth after warnings from Poloz and Finance Minister Jim Flaherty about record debts taken on at low interest rates. (Bloomberg)


Outperform

Current Target Upside/

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

(Bt) (Bt) (%) 2013F 2013F

ADVANC Buy 245.00 319.00 30.2 19.3 5.2

AOT Buy 161.50 222.00 37.5 21.4 1.9

BTS Trading Buy 7.90 10.20 29.1 36.4 6.8

INTUCH Trading Buy 76.00 104.00 36.8 16.1 5.6 .

PTT Buy 326.00 388.00 19.0 8.3 4.2

PTTGC Buy 70.00 82.10 17.3 9.4 4.8

Underperform

Current Target Upside/

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

(Bt) (Bt) (%) 2013F 2013F

AP Neutral 5.05 6.30 14.0 5.8 3.8

KTB Buy 16.80 28.30 68.5 7.8 4.5

TCAP Neutral 31.00 41.00 32.3 4.1 4.3

TISCO Sell 35.75 41.00 14.7 6.7 7.2

Rank Symbol Rank Symbol4-Sep 3-Sep 2-Sep 30-Aug 29-Aug 4-Sep 3-Sep 2-Sep 30-Aug 29-Aug

1 KBANK 486.2 244.8 (29.6) 22.9 (231.9) 1 BAY (224.1) (261.0) 19.7 57.7 (211.6)

2 AOT 161.3 98.6 86.9 216.8 39.9 2 SCC (203.6) 113.6 (18.5) 92.3 103.9

3 BBL 104.7 134.1 35.9 (46.2) (180.4) 3 CPALL (133.5) (59.2) 63.6 253.1 (66.9)

4 INTUCH 101.4 47.7 338.0 258.6 253.1 4 BANPU (125.6) (12.6) 52.2 25.5 37.5

5 LH 85.9 24.8 (58.9) 106.4 28.0 5 PTTEP (63.1) (3.8) (20.6) (99.9) (123.3)

6 BTS 71.1 40.7 27.1 32.4 (1.1) 6 TRUE (59.1) 10.8 (0.5) 37.4 (108.3)

7 PTT 69.9 (76.3) 19.4 245.8 512.1 7 SCB (56.7) 111.8 122.8 (47.1) 33.1

8 ADVANC 62.7 295.5 403.9 53.6 (201.8) 8 BEC (47.3) (4.2) 30.2 10.4 (2.8)

9 DTAC 36.9 114.2 24.1 55.0 4.0 9 CK (34.3) 23.1 3.6 2.0 (9.2)

10 MAJOR 25.4 (10.3) 15.8 106.1 9.3 10 PTTGC (32.1) 8.1 0.8 65.1 (36.5)

11 STEC 20.1 5.2 10.5 52.9 88.0 11 KTB (30.2) 64.2 8.8 80.0 0.2

12 IVL 18.0 (2.2) (6.6) 3.2 (31.7) 12 AMATA (29.4) 10.2 1.2 7.6 (17.2)

13 CPN 17.5 38.2 13.6 129.0 15.7 13 IRPC (28.1) (12.5) (17.7) (5.2) (8.1)

14 BH 16.5 15.2 12.5 13.6 (63.1) 14 TOP (23.4) (12.3) (16.0) (14.7) 0.4

15 DELTA 11.9 2.7 22.3 (0.7) 1.7 15 MINT (18.8) 6.1 35.8 106.6 6.4

16 UNIQ 9.9 0.0 0.1 (8.3) (21.6) 16 RATCH (16.4) (4.5) 1.8 2.4 (7.9)

17 TMB 9.6 29.7 (135.4) 6.2 (43.1) 17 TCAP (15.9) 12.3 (10.5) (14.2) 0.3

18 LANNA 8.4 (0.7) (0.0) (0.0) (0.0) 18 CPF (15.4) (15.2) (3.6) 1.9 66.3

19 PM 8.0 6.8 0.7 0.1 0.2 19 THAI (15.4) 2.5 (12.5) (2.2) (9.4)

20 EGCO 7.6 9.4 10.6 18.8 14.5 20 DCC (14.3) (4.8) (0.1) 0.6 2.9

% No.of Shars

Symbol BUY SELL Total NET Turnover Symbol In Hand

1 KBANK 1,167.5 681.4 1,848.9 486.2 60.6 1 TISCO-P 0.02 0.03 66.2

2 ADVANC 310.4 247.7 558.2 62.7 19.2 2 BBL 573.2 1,908.8 30.0

3 PTT 290.1 220.2 510.3 69.9 12.9 3 KBANK 631.0 2,393.3 26.4

4 SCC 152.6 356.2 508.9 (203.6) 37.7 4 INTUCH 738.9 3,206.4 23.1

5 PTTEP 183.0 246.1 429.1 (63.1) 13.5 5 SPALI 372.0 1,716.6 21.7

6 BBL 261.4 156.8 418.2 104.7 25.9 6 E-W1 75.0 347.0 21.6

7 SCB 146.5 203.2 349.7 (56.7) 15.8 7 GOLD-W1 74.2 392.1 18.9

8 AOT 217.0 55.6 272.6 161.3 24.0 8 LH 1,805.9 10,025.9 18.0

9 BAY 23.3 247.4 270.6 (224.1) 18.5 9 THRE 631.4 3,512.5 18.0

10 BANPU 65.8 191.4 257.1 (125.6) 8.1 10 LPN 249.0 1,475.7 0.0

11 DTAC 140.5 103.6 244.2 36.9 44.4 11 TWFP 15.8 95.1 16.6

12 CPALL 33.0 166.5 199.5 (133.5) 12.3 12 DTAC 368.1 2,367.8 15.5

13 INTUCH 150.3 48.9 199.3 101.4 9.0 13 TCAP 196.7 1,277.8 15.4

14 PTTGC 72.3 104.4 176.8 (32.1) 10.7 14 AP 423.7 2,859.9 14.8

15 BIGC 76.9 85.0 161.9 (8.1) 55.1 15 THIP 1.2 8.0 14.5

16 LH 122.2 36.4 158.6 85.9 43.8 16 LALIN 115.6 825.0 14.0

17 CPN 62.8 45.2 108.0 17.5 24.6 17 BAY 836.8 6,074.1 13.8

18 KTB 38.4 68.6 106.9 (30.2) 8.2 18 PRANDA 56.0 406.7 13.8

19 TOP 34.2 57.6 91.7 (23.4) 3.3 19 GBX 139.1 1,089.1 12.8

20 CPF 37.8 53.2 91.0 (15.4) 7.7 20 LRH 21.0 166.7 12.6

Source: SET,RHB OSK

Top 20 Net SellNVDR Net Sell Value (Bt mn)

NVDR Daily Trading by Stock

Top 20 Net BuyNVDR Net Buy Value (Bt mn)

Capital Shares

Paid Up Capital % of Paid Up

--------------NVDR Most Active Values (Bt m)--------------- -----------NVDR Outstanding Share (m shares)-----------

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

Platform 1

Company Update, 4 September 2013

Glow Energy (GLOW TB) Neutral (Maintained) Utilities - Electric Target Price: THB69.50

Market Cap: USD3,048m Price: THB67.00

Trimming Earnings Estimates And TP

Macro

1.00

Risks

1.00

Growth

2.00

Value

2.00

76

82

87

93

99

105

110

116

55

60

65

70

75

80

85

90

Glow Energy (GLOW TB)Price Close Relative to Stock Exchange of Thailand Index (RHS)

1

1

2

2

3

3

4

4

Se

p-1

2

No

v-1

2

Ja

n-1

3

Ma

r-1

3

Ma

y-1

3

Ju

l-1

3

Vo

l m

Source: Bloomberg

Avg Turnover (THB/USD) 80.6m/2.58m

Cons. Upside (%) 14.9

Upside (%) 3.7

52-wk Price low/high (THB) 58.3 - 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

Licence No.23517

[email protected]

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

Total turnover (THBm) 35,657 40,359 57,204 66,084 69,657

Reported net profit (THBm) 5,716 3,494 6,403 7,950 8,659

Recurring net profit (THBm) 5,716 3,494 5,451 7,950 8,659

Recurring net profit growth (%) 36.5 (38.9) 56.0 45.8 8.9

Core EPS (THB) 3.91 2.39 3.73 5.43 5.92

DPS (THB) 1.87 1.97 1.85 2.75 2.99

Dividend Yield (%) 2.8 2.9 2.8 4.1 4.5

Core P/E (x) 17.1 28.1 18.0 12.3 11.3

Return on average equity (%) 17.7 10.3 17.9 20.2 19.9

P/B (x) 2.90 2.86 2.62 2.37 2.15

P/CF (x) 11.3 42.9 6.6 7.3 7.3

EV/EBITDA (x) 18.0 18.7 14.4 9.4 8.3

Net debt to equity (%) 135.3 165.7 140.6 107.6 81.0

Our vs consensus EPS (%) 0.0 0.0

Source: Company data, RHB estimates

We nudge down our earnings estimates and TP as we fine-tune our assumptions for natural gas and coal costs. We expect Gheco-One (Glow’s largest IPP) to run at full capacity by end-September vs 87% currently, once its technical issues are resolved. We expect Glow to benefit from the weakening THB/USD, as its power plants are USD-linked to some extent. Maintain NEUTRAL, with a lower THB69.50 TP.

Trimming earnings and TP. We are paring our earnings forecasts from

FY14 onwards, after adjusting the natural gas price upwards to THB315-320/mmbtu (million metric British thermal units) from THB290-300/mmbtu, and revising the coal price downwards to USD80/ton from USD85/ton. We have also adjusted some of the power plants’ availability. Our DCF-derived target price declines slightly to THB69.50/share from THB71.20/share. We maintain our NEUTRAL recommendation on this stock.

Gheco-One is currently running at 580MW of its total capacity of

660MW. This is due to technical problems with one of its preheaters (of which it has eight in total). The plant is expected to be running at full capacity by end-September. This incident will shave off c.THB150m from Gheco-One’s EBITDA.

Glow to benefit from weakening THB/USD and vice versa. Glow’s

earnings, excluding forex gain/loss, will improve as the THB weakens and vice versa. This is because sales from small power plants (SPPs) and independent power plants (IPPs) to the Electricity Generating Authority of Thailand (EGAT) are indexed to the US dollar. SPPs sales to EGAT for gas power plants and coal power plants are 80%- and 70%-linked to the USD respectively. Its IPPs, namely Houay Ho (Laos), Glow IPP and Gheco-One IPP, are 100%, 90% and 50% linked to the US dollar respectively. The industrial customer tariff is based on Thailand’s base electricity tariff rates plus fuel transfer. We are assuming a 50% USD link for its sales to industrial customers. All fuel costs (natural gas and coal) are in USD. Glow currently has a total of USD600m in USD-denominated debt. Its net debt-to-equity and debt-to-equity were 1.36x and 1.56x respectively as of 2Q13.

Glow Energy (GLOW TB) 4 September 2013


Figure 1: Earnings and TP revision 2013F 2014F 2015F

Net profit (THB m,new) 7,950 8,659 8,534

Net profit (THB m, old) 7,986 9,157 9,125

% change 0% -5% -6%

EPS (THB, new) 5.43 5.92 5.83

EPS (THB, old) 5.46 6.26 6.24

% change 0% -5% -6%

Target price (THB, new) 69.5

Target price (THB, old) 71.2

% change -2%

Source: RHB estimates

Figure 2: 2014F earnings, THB/USD sensitivity THB/USD 20 25 30 35 40

Revenue (THBm)

65,519

67,588

69,657

71,727

73,796

Change -6% -3% 0% 3% 6%

EBITDA (THBm)

17,501

17,835

18,169

18,503

18,837

Change -4% -2% 0% 2% 4%

Net profit (THBm)

13,214

10,937

8,659

6,382

4,104

Change 53% 26% 0% -26% -53%

TP (THB/share)

68

69

69

70

71

Change -2% -1% 0% 1% 2%


Figure 3: Glow’s total capacity

Power plant Type COD Mwe % stake Effective Mwe

Glow IPP Natural gas-fired combined cycle plant Jan-03 713 95%

677

Glow Energy plant Cogeneration power plant Oct-96 359 100%

359

Glow SPP 1 Cogeneration power plant Feb-98 124 100%

124

Glow SPP 2/SPP 3 Hybrid NG and coal-fired cogeneration facility Mar-99 513 100%

513

Steam (967tph)

Dec-99

258 100%

258

Houay Ho (Laos) 152MW Hydro, Laos 1Q09 152 67%

102

CFB3: 115MW Cogen Cogeneration power plant 4Q10

115 100%

115

TNP Acquisition Cogeneration power plant 3Q11

143 100%

143

Phase 5: Cogen 382MWeq Cogeneration power plant 3Q11

382 100%

382

GHECO-One: 660MW IPP Coal 1Q12

660 65%

429

TNP2: Cogen 110MW Cogeneration power plant 4Q12

110 100%

110

Total Glow 100%

3,530

3,213




Financial Exhibits

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

Total turnover 35,657 40,359 57,204 66,084 69,657

Cost of sales (29,059) (33,570) (48,303) (52,715) (55,202)

Gross profit 6,598 6,789 8,901 13,369 14,455

Gen & admin expenses (501) (708) (1,309) (1,667) (1,739)

Operating profit 6,097 6,081 7,591 11,703 12,717

Operating EBITDA 8,984 9,498 11,985 17,155 18,169

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

Operating EBIT 6,097 6,081 7,591 11,703 12,717

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

Other recurring income 494 599 61 - -

Interest income 74 126 90 425 313

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 9,138 10,187

Taxation (615) (925) (704) (1,188) (1,528)

Minority interests (502) 145 - - -

Profit after tax & minorities 5,716 3,494 6,403 7,950 8,659

Reported net profit 5,716 3,494 6,403 7,950 8,659

Recurring net profit 5,716 3,494 5,451 7,950 8,659


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

Operating profit 6,097 6,081 7,591 11,703 12,717

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

Change in working capital 1,191 (5,338) 5,809 28 (772)

Other operating cash flow 494 599 61 - -

Operating cash flow 10,669 4,760 17,856 17,183 17,397

Interest received 74 126 90 425 313

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

Tax paid (615) (925) (704) (1,188) (1,528)

Cash flow from operations 8,641 2,283 14,889 13,430 13,340

Capex (24,046) (13,331) (6,933) 737 (0)

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

Other investing cash flow 3,843 (747) 446 (1,516) (337)

Cash flow from investing activities (20,229) (14,377) (6,439) (779) (337)

Dividends paid (2,611) (2,742) (2,879) (2,705) (4,022)

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 (9,326)

Cash at beginning of period 7,137 8,704 4,889 11,861 28,325

Total cash generated (224) (3,109) 4,660 16,464 3,677

Forex effects 1,654 (854) 661 - -

Implied cash at end of period 8,567 4,741 10,210 28,325 32,002




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 29,459 33,136

Inventories 2,448 4,434 4,880 4,013 4,230

Accounts receivable 3,546 4,965 8,781 8,607 9,073

Other current assets 1,270 2,330 649 1,662 1,752

Total current assets 17,717 20,412 27,305 43,741 48,190

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 107,326 120,235 129,619 139,865 138,861

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 1,775 356 610 411 433

Total non-current liabilities 59,764 68,181 62,797 67,082 57,800

Total liabilities 69,374 81,003 86,671 92,989 87,707

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

Retained earnings reserve 16,220 16,688 19,790 23,718 27,997

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

Shareholders' equity 33,784 34,252 37,355 41,282 45,561

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

Total equity 37,952 39,232 42,948 46,876 51,154

Total liabilities & equity 107,326 120,235 129,619 139,865 138,861


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

Revenue growth (%) 3.3 13.2 41.7 15.5 5.4

Operating profit growth (%) 23.7 (0.3) 24.8 54.2 8.7

Net profit growth (%) 36.5 (38.9) 83.3 24.2 8.9

EPS growth (%) 36.5 (38.9) 83.3 24.2 8.9

Bv per share growth (%) 9.2 1.4 9.1 10.5 10.4

Operating margin (%) 17.1 15.1 13.3 17.7 18.3

Net profit margin (%) 16.0 8.7 11.2 12.0 12.4

Return on average assets (%) 6.0 3.1 5.1 5.9 6.2

Return on average equity (%) 17.7 10.3 17.9 20.2 19.9

Net debt to equity (%) 135.3 165.7 140.6 107.6 81.0

DPS 1.87 1.97 1.85 2.75 2.99

Recurrent cash flow per share 5.9 1.6 10.2 9.2 9.1




SWOT Analysis

Strong market reputation with high corporate governance

It has a strong major shareholder, GDF Suez

Its competitors have strong connections with the Government as well as government agencies

While Glow has a global reach through its parent company, it is a local player with a highly qualified management team

Government connections may be lacking

-60%

-33%

-7%

20%

47%

73%

100%

0

5

10

15

20

25

30

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 has a total power generating capacity of 3,530MWe. Its Thai IPPs and SPPs sell electricity and steam to industrial customers and EGAT. Its power plants use both natural gas and coal as fuel.



Recommendation Chart

11

21

31

41

51

61

71

81

91

Sep-08 Dec-09 Mar-11 Jun-12

Price Close

NR

66.9

83.0

82.9

69.7

71.2

Recommendations & Target Price

Buy Neutral Sell Trading Buy Take Profit Not Rated

Source: RHB estimates, Bloomberg

Date Recommendation Target Price Price

2013-08-01 Neutral 71.2 70.5

2013-06-25 Neutral 69.7 67.8

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

7

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. 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8

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. DMG & Partners Research 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 DISCLAIMERS This research is issued by DMG & Partners Research Pte Ltd and it is for general distribution only. It does not have any regard to the specific investment objectives, financial situation and particular needs of any specific recipient of this research report. You should independently evaluate particular investments and consult an independent financial adviser before making any investments or entering into any transaction in relation to any securities or investment instruments mentioned in this report. The information contained herein has been obtained from sources we believed to be reliable but we do not make any representation or warranty nor accept any responsibility or liability as to its accuracy, completeness or correctness. Opinions and views expressed in this report are subject to change without notice. This report does not constitute or form part of any offer or solicitation of any offer to buy or sell any securities. DMG & Partners Research Pte Ltd is a wholly-owned subsidiary of DMG & Partners Securities Pte Ltd, a joint venture between 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) and Deutsche Asia Pacific Holdings Pte Ltd (a subsidiary of Deutsche Bank Group). DMG & Partners Securities Pte Ltd is a Member of the Singapore Exchange Securities Trading Limited. DMG & Partners Securities Pte Ltd and their associates, directors, and/or employees may have positions in, and may effect transactions in the securities covered in the report, and may also perform or seek to perform broking and other corporate finance related services for the corporations whose securities are covered in the report. This report is therefore classified as a non-independent report. As of 3 September 2013, DMG & Partners Securities Pte Ltd and its subsidiaries, including DMG & Partners Research Pte Ltd, do not have proprietary positions in the subject companies, except for: a) - As of 3 September 2013, none of the analysts who covered the stock in this report has an interest in the subject companies covered in this report, except for: a) - DMG & Partners Research Pte. Ltd. (Reg. No. 200808705N)

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Thai Institute of Directors Association (IOD) – Corporate Governance Report Rating 2012

ADVANC BCP DRT IRPC NOBLE QH SC SYMC TOP AOT BECL EASTW KBANK PHOL RATCH SCB THAI TSTE ASIMAR BKI EGCO KK PS ROBINS SCC TIP TTA BAFS BMCL ERW KTB PSL RS SE-ED TIPCO

BANPU BTS GRAMMY LPN PTT SAMART SIM TISCO BAY CPN HEMRAJ MCOT PTTEP SAMTEL SIS TKT BBL CSL ICC NKI PTTGC SAT SNC TMB

2S BROOK DTAC HMPRO MACO OFM S&J SSSC THRE TSC ACAP BWG DTC HTC MAKRO OGC S&P STANLY TIC TSTH AF CENTEL ECL IFEC MBK OSIHI SABINA STEC TICON TTW AIT CFRESH EE INTUCH MBKET PAP SAMCO SUC TIW TUF AKR CGS EIC ITD MFC PDI SCCC SUSCO TK TVO AMATA CHOW ESSO IVL MFEC PE SCG SVI TLUXE UAC AP CIMBT FE JAS MINT PG SCSMG SYNTEC TMT UMI ASK CK FORTH KCE MODERN PHATRA*** SFP TASCO TNITY UP ASP CM GBX KGI MTI PJW SITHAI TCAP TNL UPOIC AYUD CPALL GC KSL NBC PM SMT TCP TOG UV BEC CPF GFPT L&E NCH PR SPALI TFD TPC VIBHA BFIT CSC GL LANNA NINE PRANDA SPCG TFI TRC VNT BH DCC GLOW LH NMG PRG SPI THANA TRT WACOAL BIGC DELTA GUNKUL LRH NSI PT SPPT THCOM TRU YUASA BJC DEMCO HANA LST OCC PYLON SSF THIP TRUE ZMICO *** PHATRA was voluntarily delisted from the Stock Exchange of Thailand effectively on September 25, 2012.

AEONTS BGT CMO GENCO JTS LHBANK NC PTL SGP SWC TPAC UT AFC BLA CNS GFM JUBILE LHK NNCL Q-CON SIAM SYNEX TPCORP VARO AGE BNC CNT GLOBAL JUTHA LIVE NTV QLT SIMAT TBSP TPIPL WAVE AH BOL CPL GOLD KASET LOXLEY OSK QTC SINGER TCB TPP WG AHC BROCK CRANE HFT KBS MAJOR PAE RASA SIRI TEAM TR WIN AI BSBM CSP HTECH KC MATCH PATO RCL SKR TF TTCL WORK AJ BTNC CSR HYDRO KDH MATI PB RICH SMIT TGCI TWFP

ALUCON BUI CTW IFS KIAT MBAX PICO ROJNA SMK THANI TYCN AMANAH CCET DRACO IHL KKC M-CHAI PL RPC SOLAR TKS UBIS APCO CEN EASON ILINK KTC MDX POST SAM SPC TMD UEC APCS CHUO EMC INET KWC MJD PPM SCBLIF SPG TMI UIC APRINT CI EPCO IRC KWH MK PREB SCP SSC TNH UMS ARIP CIG FNS IRCP KYE MOONG PRECHA SEAFCO SST TNPC UOBKH AS CIMBI*** FOCUS IT LALIN MPIC PRIN SENA STA TOPP UPF ASIA CITY FSS JMART LEE MSC PSAAP SF SVOA TPA US

*** CIMBI was voluntarily delisted from the Stock Exchange of Thailand effectively on September 25, 2012.

IOD (IOD Disclaimer)

การเปิดเผลผลการส ารวจของสมาคมส่งเสริมสถาบันกรรมการบรษิัทไทย (IOD) ในเรื่องการก ากับดูแลกิจการ (Corporate Governance) นี้เป็นการด าเนินการตามนโยบายของส านักงานคณะกรรมการก ากับหลักทรัพย์และตลาดหลักทรัพย์ โดยการส ารวจของ IOD เป็นการส ารวจและประเมินจากข้อมูลของบรษัทจดทะเบียนในตลาดหลักทรัพย์แห่งประเทศไทยและตลาดหลกัทรัพย์เอ็มเอไอ ที่มีการเปิดเผยต่อสาธารณะและเป็นข้อมูลที่ผูล้งทุนทั่วไปสามารถเข้าถงึได้ ดังนั้นผลส ารวจดังกล่าวจึงเป็นการน าเสนอในมุมมองของบุคคลภายนอกโดยไม่ได้เป็นการประเมินการปฏิบัติและมิได้มีการใช้ข้อมูลภายในในการประเมิน

อนึ่ง ผลการส ารวจดังกล่าว เป็นผลการส ารวจ ณ วนัที่ปรากฎในรายงานการก ากับดแูละกิจการบริษัทจดทะเบียนไทยเท่านั้น ดังนั้นผลการส ารวจจึงอาจเปลี่ยนแปลงได้ภายหลังวันดังกล่าว ทัง้นี้บริษัทหลักทรัพย์ อาร์เอสบี โอเอส เค จ ากัด (มหาชน) มิได้ยืนยันหรือรับรองถึงความถูกต้องของผลการส ารวจดงักล่าวแต่อย่างใด

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