Investment Thesis
The analyst meeting with EGCO yesterday gave us the feeling that the
stock price would likely appreciate further, even after the stock has been
one of the best performers within the Utilities space YTD. The earnings
growth profile in 2016 remains most visible on the back of a substantial
capacity addition from Khanom 4 (KN4, COD 19 Jun). Additionally, we
see positive news flows will potentially catalyze the share price in the near
term. Given the current valuation of PBV/ROE at 0.11x versus industry
mean of 0.13x, we believe EGCO’s share price deserves a further
rerating to bring it to at least on par with its peers. Our BUY rating stands