Investing in power plant stocks: Why it's a good choice and which companies to follow in 2024

Main Reasons Why Investors Are Turning to Power Utility Stocks

Power utility stocks are considered defensive assets (Defensive Stocks) because electricity is an essential service that must be continuously supplied to both industrial sectors and households. This demand not only remains stable but also increases with economic growth. Coupled with government policies promoting renewable energy development, this business sector has long-term growth potential.

Additionally, the development plans for power generation capacity (Power Development Plan: PDP) and renewable energy development plans (Alternative Energy Development Plan: AEDP) serve as key drivers shaping investment directions in this industry. Power purchase agreements also play a crucial role in providing profit stability for investors.

Components of Power Plant Business: Essential Knowledge Before Investing

Private power producers are typically categorized by capacity:

• Large private power plants (IPP): Capacity of 90 MW and above
• Medium-sized private power plants (SPP): Capacity of 10-90 MW
• Small private power plants (VSPP): Capacity below 10 MW

Energy sources used for power generation are diverse: solar, hydro, natural gas, nuclear, and other renewables such as wind and biomass.

8 Power Utility Stocks to Watch

Latest 6-month performance comparison table

1. BANPU - An Industry Veteran Leader

Banpu Power is a major power producer operating from Thailand across 7 Asia-Pacific countries, owning 41 power plants in Thailand, Laos, China, Japan, Vietnam, Indonesia, Australia, and the United States. The total capacity is 3,656 MW, with 11.20% from renewable energy.

First-half results: Revenue of 90,673.73 million THB, net profit of 2,488.71 million THB, current stock price 111.50 THB, YTD -5.88%.

Analysts from investing.com forecast a price range of 5.00 - 8.00 THB, with an average of 6.75 THB.

2. GULF - The Daily Market Winner

Gulf Energy Development is Thailand’s integrated energy company, covering power generation, gas business, renewables, hydro power, and district cooling. Recently, the company announced a 90,000 million THB investment plan in renewable energy over 5 years, including establishing subsidiaries and preparing to acquire (VTO) securities in ADVANCE and THCOM stocks.

First-half performance: Revenue of 64,896.44 million THB, net profit of 8,239.79 million THB, current price 66.50 THB, YTD +54.49%.

Investing.com estimate: high of 68.00 THB, low of 49.00 THB, average 56.92 THB.

3. GPSC - Pioneer of Clean Energy

Global Power Synergy operates mainly in power and steam production, industrial water, under the 4S strategy for stable returns. Recently, the company secured a long-term loan of 7,000 million THB from three financial institutions to accelerate clean energy projects.

First-half results: Revenue of 48,426.98 million THB, net profit of 2,292.55 million THB, current price 46.25 THB, YTD -3.09%.

Investing.com analysis: max 61.00 THB, min 43.50 THB, average 53.46 THB.

4. BGRIM - Multi-Business Focus

B.Grimm Power focuses on power from combined heat and renewable energy plants. The company is expanding into healthcare, lifestyle, real estate, and digital technology. Recently, it signed a solar power purchase agreement with a government agency.

First-half performance: Revenue of 28,344.78 million THB, net profit of 607.17 million THB, current price 23.40 THB, YTD -12.66%.

Investing.com estimate: max 31.06 THB, min 19.60 THB, average 26.66 THB.

5. EA - Electric Vehicle Supporter

B. Energy operates under the vision Energy for The Future, developing batteries, electric vehicles, commercial EVs, electric boats, and charging stations. This year, the company is attracting support for Thai-made electric pickup trucks for entrepreneurs.

First-half results: Revenue of 10,368.81 million THB, net profit of 1,430.44 million THB, current price 7.80 THB, YTD -81.36%.

Investing.com analysis: max 35.00 THB, min 5.00 THB, average 17.33 THB.

6. SSP - Focus on Renewable Energy

S.P. Power Corporation pioneers renewable energy by expanding its portfolio to solar farms, rooftop solar, and renewables. The company plans to add assets exceeding 30,000 million THB by 2024, spreading across Asia. Tris maintains a BBB+ credit rating, reflecting financial stability.

First-half results: Revenue of 1,709.90 million THB, net profit of 326.89 million THB, current price 5.90 THB, YTD -25.62%.

Investing.com forecast: 8.90 THB, an increase of approximately 50.85%.

( 7. CKP - Walking Two Paths

CK Power was formerly known as a construction contractor but now expands into power generation, managing hydro power projects, cogeneration, and solar farms through six subsidiaries.

First-half results: Revenue of 5,111.09 million THB, net loss of 387.05 million THB, current price 3.70 THB, YTD +19.02%.

Investing.com analysis: max 5.20 THB, min 4.35 THB, average 4.70 THB.

) 8. GUNKUL - Pioneer of New Platforms

Gunkul Engineering is an expert in renewable energy since its founding. Its growth is driven by harmonizing power supply for both public and private sectors. The latest innovation is Volt, Thailand’s first Peer-to-Peer energy trading platform, aiming to develop 9-10 additional energy products.

First-half results: Revenue of 5,002.69 million THB, net profit of 761.43 million THB, current price 2.80 THB, YTD +2.86%.

Investing.com estimate: max 5.00 THB, min 2.70 THB, average 3.76 THB.

Why Power Utility Stocks Are a Good Choice for Your Portfolio

Stability and Consistent Profitability

Power plant businesses have unique characteristics: stable profits, unchanging demand, and long-term confidence from power purchase agreements. Although returns may not be as high as speculative assets, long-term profits often surpass traditional bank deposits.

Growth Opportunities

Government policies support renewable energy investments according to energy development plans, providing opportunities for companies to expand capacity and launch new projects to meet rising energy demand.

Risk Diversification

Investors with limited risk appetite or those seeking safe havens in volatile markets can use power utility stocks as a reliable hedge.

How to Buy and Trade Power Utility Stocks

Option 1: Thai Stock Market

For stocks listed on the main stock exchange, such as GULF and BGRIM, investors need to open an account with a securities asset management company, e.g., Bualuang Securities, Kasikorn Securities, or Maybank Kim Eng Securities.

Important points:

• Minimum trading volume: 100 shares
• Example: Buying 100 GULF shares at 50 THB each costs 5,000 THB. If the price moves to 55 THB, profit is 500 THB.
• Trading tools: STREAMINGPRO and ASPEN are popular among Thai traders.

Option 2: Trading via an Offshore Securities Company ###CFD###

Trading through contracts for difference (CFD) offers various benefits:

Advantages:

• Trade both directions (up-down)
• Use leverage to reduce capital but increase profit potential
• Wide range of products (stocks, gold, currencies, indices)
• Real-time price data

Service providers include: MiTrade

• Starting capital: (- Account opening: only 3 minutes
• Demo account: practice trading with $50,000 free

Summary

Power utility stocks are considered one of the suitable long-term investment options due to their defensive nature. Electricity is a fundamental societal need, enabling this business to enjoy excellent growth and stability. Despite market uncertainties, confidence in the business fundamentals remains strong, making these assets ideal for diversification and long-term value accumulation.