We still see a high probability of La Nina in 2H24, ie > 50% between September-November 2024, although current climate conditions are showing signs of neutrality.
We still see a high probability of La Nina in 2H24, ie > 50% between September-November 2024, although current climate conditions are showing signs of neutrality.
Considering historical data, a decrease in the ONI index (compared to the current level of 0.5) suggests that La Niña is likely to occur. After an El Niño event has an ONI index >0.5, as happened in 2009, 2015 and 2019, it usually turns into a La Niña stage the following year, and therefore, water flow and rainfall gradually increase (only in 2H67).
2# Profitability is widely expected to rebound in 2Q24F.
As of Aug 9, we believe CKP's net profit for 2Q24F will be 72 million baht (upgraded from a net loss of 461
million baht in 1Q24 and a profit of 2 million baht in 2Q23) excluding FX loss (FX loss significantly lower
From Luang Prabang project: LPCL) core profit of 122 million baht (to recover from core loss of 242)
million baht in 1Q24 and 13 million baht in 2Q23 core loss QoQ and recovered both
It will be a season of robust power generation from various hydropower plants through the NN2 project.
513GWh of electricity can be dispatched to the system (+38% QoQ and +74% YoY), while electricity generation
The Xayaburi project also increased to 1,156GWh (+10% QoQ but -12% YoY) following increased inflows to the dam.
from Xiaowan and Nuozadu reservoirs in China
#3 Reward/Risk is interesting – 2024F profits are expected to be bright after declining in 2023.
Of all the 8 stocks we examined, CKP is the only power plant stock that has outperformed the market by 9% over the period.
YTD (compared to 6% in 1Q24), although CKP stock price has gained 19%, it is still trading near the – level.
At 2SD from the last PE (down 9% relative to the SET index), the risk/reward is impressive.
We expect net profit growth of 26% YoY / 19% YoY / 10% YoY in 2024-26F respectively.
New Waves We also weigh heavily on the possibility of the central bank cutting interest rates further.
Year 2024, every 25bps reduction in interest rates, CKP profit will increase by 90-95 million baht/year.
Evaluation & Action
BUY Recommend DCF is ready to maintain the target price at 5.00 baht, CKP is currently in a bullish cycle.
La Nina is more likely and the market gains when the interest rate cycle ends.
Especially in 2H24, our tactical call idea follows the past CKP stock price pattern.
Stock prices are typically low in the first quarter of the year before rising in anticipation of a return on investment.
≥25% based on our study from 2014-2023.
Risks
Unscheduled maintenance shutdowns, cost overrun issues and fluctuations in exchange rates and interest rates
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