CK Power Public Company Limited (CKP) Earnings Call Transcript & Summary

Good afternoon, everyone. Thank you for joining CK Power Public Company Limited Q1 2025 Digital Roadshow. And thank you, Stock Exchange of Thailand who arranged this very useful session. First, we would like to introduce our management who joined the meeting. First one, Khun Muntana Auekitkarjorn, Senior Deputy Managing Director, Corporate Planning.

Good afternoon.

Second, Khun Thitipat Nananukool, our CFO.

Good afternoon.

And I'm Tummakajorn Nuntapong and I'm from Investor Relations. Good afternoon. Okay. Today, we're going to talk about 5 topics. First one, we're going to quickly wrap up, who we are and what we are doing. Second, we go through our financial performance, especially in the first quarter of this year. And the third one, we're going through the project progress update. And the last one, we're going to be -- talk about the business outlook from this year until the early 2030, and we close with the Q&A. Okay. For the corporate overview, CK Power is the power investment arm of CK -- CH. Karnchang of CK Group, consisting of CK itself, the top-tier construction company in Thailand, TTW leading industrial water utilities company and BEM, the leading expressway and metro company in Thailand as well. Totaling the holding in CK Power of 72%, and we have free float of around 28%. Currently, we have a market cap of around THB 24 billion and equivalent to around USD 730 million. Our current portfolio, we have around 3.6 gigawatt installed capacity dominated by hydro power plants, around 92% and around 7% is cogeneration and the rest is the solar power plants. Since we have a lot of hydro and solar in our portfolio, so we are almost 100% renewable and green company. Around 93% is renewable and the rest of only 7% is considered to be the conventional energy. And we sell almost of our energy to the Thailand's state-owned enterprise, which has the long-term PPA around 25 years plus. And the rest, we sell only 2 minority part to the EDL, which is Electricite du Laos only 2% and industrial customers in Thailand of 2% as well. In terms of locations, we -- hydro power plants are in Lao consisting of the Nam Ngum 2, the reservoir. We host 46% with 615 capacity and Xayaburi and Luang Prabang, which are the run-of-river type. We host 42.5% and they have around 1.2 gigawatt of capacity and Luang Prabang, the new one, which is now under construction and we will see in early 2030. We hold around 50%, and we have a capacity of 1.4 gigawatt. Around -- about the power plants in Thailand, we have cogeneration in the Bangpa-in industrial estate in Ayutthaya, which we own 65% with the capacity of 238 capacity. And we have 13 solar power projects across Thailand, North, Northeast and Central of Thailand. We own 30% to 100% of them, which a total capacity of 42 megawatts. Okay. Now we go through the financial performance. In terms of revenue, CKP consolidated revenue is around THB 10 billion a year, which consists of -- in consolidated basis. We consider Nam Ngum 2, Bangpa-in Cogeneration, Bangkhenchai and this is CKP itself into the consolidated basis. In Q1 this year, the revenue slightly dropped around 3% from the Q1 last year, mainly from the -- revenue from Bangpa-in Cogeneration, which is following -- dropped following the gas price and the FT, which is the adjusted tariff in Thailand. But it helped by Nam Ngum 2 strong electricity revenue, which increased from last year around THB 30 million. In terms of EBITDA before the share of profit, we have EBITDA of around THB 4 billion to THB 5 billion -- THB 4 billion to THB 4.5 billion a year. In Q1, the EBITDA is slightly increased from the Q1 last year, again, with the contribution from Nam Ngum 2, which is the main contributor of EBITDA of CKP consolidated basis. As you will see Nam Ngum 2 is provided around more than half of the EBITDA and following by the Bangpa-in Cogen. And again, the Bangpa-in Cogen lower FT rate from last year is a bit drop from EBITDA from last year, which is offset the Nam Ngum 2 growth of EBITDA. The core share profits, which we take out the [indiscernible] impact in the share profit. The share profit is mainly from the Xayaburi and Luang Prabang, which are the run-of-river type and the share of profit from JVs, which are the solar -- these are solar power plants, which we hold around 30% in each. In quarter 1 this year, the share profit has grown significantly, around 96%, which the main driver is from Xayaburi operation. It grows much higher than last year, mainly from the higher water flow to the power plants and the lower finance costs following the interest rate for both in U.S. and in Thailand. And the last one, the core net profit. The core net profit of CKP -- I mean, the core net profit margin of CKP is around 10% to 20% this year. And again, in -- Q1 this year is brought significantly more than 100% -- more than 120% this year. And the main driver is from both hydropower plant in Lao, Nam Ngum 2 and Xayaburi. As I mentioned earlier, the 2 has a strong electricity sales as well as the Nam Ngum 2 has a strong electricity sales as well as the Xayaburi has strong electricity sales this year as well. For the Nam Ngum 2 itself, they have the annual revenue of around THB 3 billion to THB 4 billion a year, and they have the core EBITDA of around 75% and the core impact is around 30%, except last year. Last year is the record high of Nam Ngum 2. They have the breakthrough or the record itself since the COD in 2013. And this momentum is continuing in Q1 this year as well. As I mentioned earlier, Nam Ngum 2 has the strong electricity sales in Q1. This is from the higher water in the reservoir from the beginning of the year and also helped by the lower operating expense because last year -- in Q1 last year, they have the expense related to the major overhaul of one of the turbine of Nam Ngum 2, which Q1 this year has no that such expense. And it's also helped by the lower finance cost because Nam Ngum 2 has redeemed its mature debentures in October last year and in March this year, totaling of almost THB 3000 million. So this all helped Nam Ngum 2 have -- continued the strong NPAT continue from last year. The key activities to monitor this year, Nam Ngum 2 will going through the major overhaul, the last one, the last unit in the end of this year in November to December. It will use around 42 to 45 days to complete the major overhaul, which will not impact to the operation. As you will see, the last year, it is the record high of Nam Ngum 2, which also has the same major overhaul in last year as well. So you will see the major overhaul is not impacting into the operation of the power plants. So in terms of the operation of Nam Ngum 2, in Q1, Nam Ngum 2 sales electricity of around almost 400 gigawatt hour, growth around 7% from Q1 last year. And Q2 this year, the Nam Ngum 2 already declared electricity production of around 520 gigawatt hour, growth about 2% from the same period last year. So in the first half of this year, Nam Ngum 2 quite sure that it's going to be growth from last year. And as you see in the reservoir level at the end of April, it stand at the 360 above the MAS level, which is much higher than the same period last year, which is 356, middle above the MAS level, which is the -- to confirm that Nam Ngum 2 has no problem to continue with the operation through the main quarter of the year, which is Q3, which is the rainy season of the year and going with the highest season of the Nam Ngum 2. For Xayaburi, the Xayaburi revenue is around THB 13 billion to THB 14 billion a year and with a core EBITDA of around 90% plus and the core NPAT is around 20%. You might notice that the core NPAT of Xayaburi is a bit lower than Nam Ngum 2 because Xayaburi still has high long-term debt, which is the debenture and bank loan. This will cause the high finance cost, which is caused the lower NPAT margin from the Nam Ngum 2. From the -- for Q1 this year, the Xayaburi has the growth -- significant growth in Q1 this year, more than 100%. This is driven by the electricity sales. As I mentioned earlier, the Xayaburi has the higher flow than Q1 last year, which is helped by the flow from the upper Mekong River from the Chinese dams and the lower finance cost from the lower interest rate from the U.S. and the Thai baht -- and the Thai baht interest rate. At the end of Q1, cost of debt of Xayaburi is standing around 6.9%. And the long-term debt, as I mentioned, it has the long-term debt of around THB 82 billion, which is both in USD and Thai baht with the fixed rate of around 20% and float rate of around almost 80%. The key activities in this year is about the partial overhauling at this time now in Q2 2025, around May or -- May and June this year. But the same as Nam Ngum 2, this is no impact to the operation because during the low season, the savory will not use all the turbine to generate the electricity. So we can doing the overhaul with the unused turbine. So in terms of the operation of Xayaburi, in the 4 months of this year, it has -- you will see, the electricity generating is growth in every month. And I think this momentum is going to be continued in the May this year because right now, in May, water flow through the power plant -- Xayaburi power plant month-to-date is still higher than last year. So for Xayaburi, it's quite straightforward, more water through the power plant equal to more electricity generating. And again, we will see the more clear picture in the Q3 when the rain season enter into the Lao. For the Bangpa-in Cogeneration, they have around THB 4 billion of revenue a year, except 2022 and '23 because the gas price is spike everywhere in the world. So the EBITDA margin is around 25% and the net profit margin is around 10%. And the first quarter of this year, the [indiscernible] slightly grown a bit, which came from the lower finance costs because the Bangpa-in Cogeneration is gradually repay its long-term loan to the bank. For the Bangpa-in Cogeneration, it has only the bank loan. So since they gradually repay their loan, the finance cost has gradually decreased as well. So the key activities in this year, so we have to close monitor the gas price and also manage the cash flow quite well in this year. And the Bangpa-in Cogeneration 2 will have the major overhaul during Q3 this year, which will use only about 1 week for completing it. And again, this will not affect the operation of the power plant. For the electricity sales for the first 4 months of this year, it's slightly decreased from last year around 3%, but the gas price is quite much lower than in the same period last year. It's standing around THB 330 and the FT rate, the adjusted tariff in Thailand is standing around THB 0.37. And the new FT rate for May until August is already announced. It's going to be THB 0.2 per kilowatt hour. And for Bangkhenchai, the solar power plant one, its revenue, it's quite dropped from the last 2 years because before that we -- the Bangkhenchai has the subsidized revenue we call adder and the adder is expired in 2023. So the performance is a little bit dropped from -- after that. But the EBITDA is still at around 80% to 90% and the net profit margin is around 15% to 20%. The Bangkhenchai still have some growth in the -- they expand that portfolio through the investment with the solar power plant with the private sector to help improve their performance in the year after, you will see in the business outlook in the last section. Okay. For the financial performance -- for the financial position, leverage ratio and the ratings, I will hand over to Khun Thitipat. Khun Thitipat over to you.

Okay. For -- next page, for financial position. In Q1, you see that the financial position, the balance sheet doesn't really change much from the end of last year. The only thing that changed a bit is that the total liability was down around THB 1.2 billion because CKP, the Nam Ngum 2, NN2, redeem its debenture for THB 1.2 billion during the quarter. Other than that, the overall balance sheet doesn't really change much from the end of last year. In terms of leverage ratio, total liabilities to total equity is around 0.77x, roughly flat period-over-period. And then for net interest-bearing debt to equity, it's running around 0.53, still relatively low. The majority of the loan and debenture of our consolidated financial is coming from CKP around THB 16 billion. The rest, around THB 8 billion and THB 4 billion from Nam Ngum 2, NN2, and BIC. These last 2 NN2 and BIC, it's a project company level debt, and we expect that over time, year-over-year, it will gradually deleverage and this portion will become less and CKP portion would gradually increase over the next 3 to 4 years, mainly because we are investing in new large hydropower plants. Average cost of debt is around 3.75%. It's increasing slightly because we gradually pay down the debenture -- the short tenor debenture. So what's left is the longer term. So it might edge up a little bit, but we have plans to also reissue the debenture to support our future investment, and we think that the rate might be around here or maybe improve a little bit. In terms of investment and CapEx plans, over the next 5 years, we are investing around THB 15 billion. Most of them are into our LPCL, our Luang Prabang Power project. Over the next 4 years, we -- especially for this year, we will invest around THB 4 billion into the project as a 50% equity holders. If you go to the next page, you see that net interest-bearing debt to adjusted EBITDA is quite at a relatively healthy level. The adjusted EBITDA is mainly the EBITDA and then we include the cash dividend received from the -- our associate share of profit. So we adjusted out the noncash item. In terms of interest coverage, it is also at a healthy level of 4.46 and maybe it's flat from the end of the year, slightly improving over the last few years. In terms of our ratings, CKP and Nam Ngum 2 have a company issue rating of A- as a TRIS local rating agency. For Xayaburi, Xayaburi has 2 rating. The local rating from TRIS rating is A- for company and BBB+ for issue ratings. For international rating, it's rated by Fitch at B+ on both company and issue ratings. CKP has planned to issue around 5 billion of new debenture to -- mainly to invest in additionally over the next few years in Luang Prabang project. The debenture is planned for around the first week of June. And for Xayaburi, Xayaburi has already issued debenture in the past. And first of those debenture is due in July. So Xayaburi is issuing a debenture to roll over those due debenture around THB 4 billion, and that will be around the -- towards the second half of July this year. Now if you go over to project progress update, we have 2 projects ongoing. Luang Prabang progress update is right now at the end of first quarter. Construction progress is 48%, and it's on plan to commercial operation start in the early of 2030. CKP holds 50% and we already injected THB 7.8 billion into the project as an equity. In terms of solar project, we have 3 ongoing projects in the first phase of our solar that we supported the BEM, our sister company. The progress is around 86% and 1 of the 3 projects already start commercial operations at the end of December, and the next 2 will be on track to start within Q2 of this year. Total capacity is 7 megawatts, and investment is roughly around THB 250 million, and we expect more to come. A little bit more details into the Luang Prabang investment. This project is a large front of river hydro projects on the Mekong River. Installed capacity is around 1,460 megawatts. total investment cost is around THB 160 billion. It will generate 6,688 gigawatt hour of energy for year, selling 100% to EGAT, Electricity Authority of Thailand. CKP hold 50% and is expected to inject a total of around THB 20.9 billion into Luang Prabang project. Right now, we've already injected THB 7.8 billion and the remaining THB 13 billion is going to be injected through the last 4 -- around 4 to 5 years going forward. And I think that's it from my part. Let me hand over to Khun Muntana to recap our outlook and future business.

Okay. Thank you. Actually, I will take not much time because now it's 2:45 already. Just a quick view. I will take around 1 minute to finish this. This is a business outlook for the pie chart on the left-hand side and the upper one, which is the bottom of our side, I think my team explained to you already. But for the business plan below, you will see the blue line. The blue line is the secure project. As he explained to you earlier, we issued a green bond in 2025 and COD, the 2 projects of BEM, which is a solar roof and solar farm mid of 2025. And in 2027, you see the expansion phase of the solar of Bangkhenchai, ERC Phase 1 to 6 megawatts. And we will go for the COD of the Luang Prabang, which is a major project of our CK Power in early 2030. And below is the project in the pipeline during 2025 to 2029, most of it is the solar project, both for the PPA and for the ERC, which is the regulators in Thailand. And we are looking for more project every year, 8 to 10 megawatts. And the last one is the sustainability framework. Okay. Last page for today's is CKP, which is a figure of our company. We will have 3 major pillars of environment, social and governance. And in each pillar, we have sub pillar to take care of the climate change, biodiversity, the human rights, the social community care and business model resilience. We have a target of our long-term target for the net zero, no net loss, the zero care of the human rights and the unresolved complaint of the community. Other than that, we have a model resilience for new customers, new locations and new innovations as well. On the right-hand side of the GHG emission, we proved to you from 2019 until 2024 that the GHG emission and the GHG intensity compared to the Thailand grid. We are quite a really low GHG intensity. In 2024, the intensity is around 0.0675 which is very low compared to Thailand grid of 0.4999 on carbon dioxide equivalent to megawatt hours. So this is the committed long-term target of sustainability framework. Okay. That's all. Two more minutes passed. Okay. Thank you very much.