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To resell repurchased shares on 17-31 January 2014, pressing share price for short term BUY


- BANPU to resell repurchased shares on 17-31 January 2014

According to board of directors' meeting on 20 December 2013, BANPU

declared that the resale of not higher than 135.6 repurchased shares (5% of

the total paid up shares) would take place on 17-31 January 2014. At the

completion of share repurchase project dated on 16 July 2013, BANPU has

repurchased 135.6 million shares, or 5% of the total paid up shares at the

total of B3.95bn, or the average buying cost of B29.12/share. For the trading

condition, resale price must not be lower than 85% of the average closing

price in five days backward. For example, if BANPU resells on 23 December

2013, resale share price in five days backward would not be lower than

B27.58/share, as the average closing price (16-20 December 2013) is

B32.45/share. After the end of the resales period (17-31 January 2014), if

BANPU cannot sell all of its repurchased shares, it will reduce its cost by

cutting the remaining repurchased listed shares.

- EPS and FV might drop below expectation due to resale of repurchased shares

The resale of all repurchased shares is beyond our expectation, as BANPU has

revealed to decrease the authorized capital of the repurchased shares, which

we has included in the current earnings forecast. Thus, net earning per share

and fair value would be lower than expected if BANPU can resell the

repurchased shares. If all 135.6 million repurchased shares are purchased,

EPS would drop by 5%. The resale would be done via the SET, be it gradual

trade or big lot trade, and the price would be under the condition. Profit from

the resale will be booked in shareholders' equity in case that average resale

price is higher than the buying cost of B29.12/share. We will revise the

forecast again and report the details after BANPU completes reselling its

repurchased shares. The resale would have no effect on BANPU's fundamental

factors, as the effect depends on the number of remaining listed shares, which

would be calculated for earnings per share.

- Resale of repurchased shares might press share price for short term. "BUY" when price weakens

We maintain end-2014 fair value (DCF) at B37.66/share. The share price

would be pressed by resale of repurchased shares for a short term, so we

recommend buying when the price weakens. In terms of long-term

fundamental factors, coal price might have already passed its lowest, so it

might increase gradually along with power plants and industries’ rising

demand, reducing benefit on BANPU’s profit. Hongsa power plant case can be

a pressuring factor in a long term. If the court rules that BANPU loses the case

and has to pay a fine of B31bn, the fair value would decrease by B8-10/share.

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