EDL-GEN: “Wish List” - next wave of capacity growth - Buy (15E TP LAK10,955/US$ 1.35)
Growth prospects intact
We make a revision to EDL-Gen’s 2015-19E earnings with 10% CAGR NP growth (vs. 6% CAGR earlier) and the TP reduced to 10,955 kip/share (vs. 11,676 kip/share previously). This is to reflect the earnings contribution from new asset acquisitions (“Wish-list” projects with an additional 521MW equity capacity) and the expected 27% dilution effect from its capital increase. Meanwhile, its 2015-16E PER, PBV and PBV/ROE still look undemanding, with a more attractive dividend yield and higher ROE compared to regional hydropower operators. We reaffirm our BUY call.
“Wish-list” projects…a big jump in capacity expansion
EDL-Gen is taking the next step in terms of new asset acquisitions through “Wish-list” projects with a combined 521MW equity capacity, funded by a capital increase (with a deal size of US$340mn). This will boost its power capacity to 1,794MW by 2018, implying 19% CAGR.
NP growth calling for 10% CAGR during 2015-19E
Given the weak 1Q15 NP following the maintenance at Xeset Dam, we cut our 2015E NP by 7%; however, good earnings development is expected in 2Q-4Q15, with the peak generation in 3Q15 and the start of new project contributions. Meanwhile, we make 2016-19E earnings revisions by +4%/+18%/+22%/+20% given the new contributions from “Wish-list” projects. Our new estimates call for NP growth at 10% CAGR in 2015-19E (vs. our earlier 6% CAGR), against EPS growth at 3% during the period due to the dilution effect from its capital increase.
Growth prospects on the upside
Given that the projected peak D/E ratio at 1.04x in 2016E is still far below its threshold policy of 2x, we expect the company to have more room to raise new debt to fund the equity call for new capacity expansion up to 1,500MW given an assumed investment cost of US$2.5mn/MW and target D/E of 70% : 30%.
First Lao satellite enters orbit on Saturday morning
in Asean Headline | November 24, 2015 9:45 am (108 views)
Test
Lao Sat-1, the first telecommunications satellite of Laos, entered the 128.5 degrees East orbital slot Saturday morning, Nov 21, allowing an official launch in the presence of Vice President Bounnhang Vorachit and senior officials of Laos and China Sichuan, China.
According to Lao News Agency, all systems of the Lao Sat-1 will be controlled by the Lao Satellite Station in Hadxayfong, Vientiane, which is staffed with 50 Lao nationals, and Chinese experts.
The project is considered a landmark in the Lao history, aiming to spur many facets of development and industry.
“The Lao Sat-1 will be very beneficial to our country because the majority of our country is mountainous. Our satellite will be used for many purposes, including distance education and medicine, telecommunications and internet links, as well as facilitating anti disaster efforts,”
Minister of Post and Telecommunications Hiem Phommachanh told media three days before the launch of Lao Sat 1.
“The satellite will last only 15 years, so during this period we will make all efforts to use raised incomes to spur many facets of development and industry in the country,” Mr Hiem said.
The minister said the Lao Sat-1 will covers 15 countries, which means Laos can lend some of its transmission space to foreign countries because demand in Laos is small.
The satellite, which is owned by the Lao Sat-1 Joint Venture Company, comprises 22 transponders, of which two will be used for communications services in the country and the remainder will be available for rent to overseas companies.
