Glow energy mulls purchase of Laos power plant shares

Glow executives said the company would be buying shares that its own parent, Suez Energy International, holds in the Hua Ho hydroelectric plant and that the investment would not exceed Bt1.7 billion. After the board's approval, a contract will be signed next month.

The plant has an annual production capacity of 138 megawatts.

A Bualuang Securities analyst said the plant was expected to generate a small annual income of Bt200 million to Bt300 million for the company.

"Glow will realise revenue from the plant immediately, boosting company growth a little this year," the analyst said.

Bualuang predicts Glow will post a net profit of Bt4.3 billion this year, dropping to Bt3.7 billion next year, due to the rising coal price and the unlikelihood of an increase in the fuel-adjustment (FT) tariff.

"The FT tariff is unlikely to increase much next year, it may even go down, so this will directly affect Glow's revenue growth next year," the analyst said.

The company's revenue and profit growth are poised to leap once its two new power plants start commercial operations in 2011.

Glow posted a second-quarter net profit of Bt2.46 billion.

Bualuang Securities is recommending "sell" on Glow shares, because the company is expected to pay a low dividend this year. But investors can buy shares in 2010 in response to the company's expected revenue growth. Bualuang expects Glow to pay a dividend of Bt1.50 a share this year.

Finansa Securities said Glow's net profit would grow 6 per cent a year on average this year and next, which will not be very attractive to investors. The company has no plans to increase production capacity this year or next but will start growing again in the next three years, by 12 per cent, or Bt5 billion, from the two new power plants.

Glow on Wednesday signed a 25-year contract to supply 660MW of power to the Electricity Generating Authority of Thailand.

On August 25, PTT Aromatics and Refining (PTTAR) extended the contract period for Glow to supply power, steam and water to the Aromatics Complex I for another 10 years, until 2021.

Sales to PTTAR contributed Bt1.4 billion of Glow's revenue last year.