Global Power Synergy Public Company Limited (GPSC), a leading producer and distributor of electricity, steam, and utilities, and shareholder of companies that produce and distribute electricity, steam, utilities, and related businesses both in Thailand and overseas, is preparing to offer 374.57 million IPO shares to raise funds for business expansion both domestically and internationally, having KT ZMICO Securities, Finansa Securities, and TISCO Securities as its financial advisors.
Mr. Noppadol Pinsupa, President of Global Power Synergy Public Company Limited (GPSC), said that the company has filed for an approval from The Office of the Securities and Exchange Commission (SEC) to offer its Initial Public Offering to the public by offering 374.576 million shares at the par value of 10 baht per share, having KT ZMICO Securities, Finansa Securities, and TISCO Securities as its financial advisors.
The company expects to raise funds and being listed on the Stock Exchange of Thailand (SET) within the second quarter of this year. The funds raised from IPO will be used in its business expansion both domestically and internationally, and as working capital. GPSC's registered and paid-up capital are 11,237,256,000 baht, comprising of 1,123,725,600 ordinary shares at the par value of 10 baht per share. Subsequently, the Extraordinary General Shareholders Meeting No. 2/2014 on November 25, 2014, resolved to approve an increase in the registered capital of no more than 3,745,752,000 baht, comprising of no more than 374,575,200 ordinary shares at the par value of 10 baht per share for IPO. The shares of Initial Public Offering (IPO) will be partly offered to its directors, management, and employees, resulting in the company’s registered capital being increased to no more than 14,983,008,000 baht, comprising of shares no more than 1,498,300,800 ordinary shares at the par value of 10 baht per share. Out of the 374.57 million IPO shares, the company will offer 365.26 million shares to the public, institution investors, and its patronages, while no more than 9.31 million shares to its directors, management, and employees. However, in case there are remaining shares left from the portion offered to its directors, management, and employees, those shares will be offered to the public.
Mr. Noppadol continued that the company aims to become one of the asian electricity leaders through expansion of its investment and projects both domestically and internationally. Its short-term goal is to increase its power production capacity, adding 600 – 1,000 MW within 2019. The focus is on acquisition of power plants and development of cogeneration power plants, combined cycle power plants, and renewable energy power plants. The company has established four key strategies for its growth as the following. 1) Growth along with PTT Group, in order to create reliability in electricity and utility supplies for the production process of the companies under the PTT Group. 2) Quick win, meaning to grow faster through short-term projects or acquisitions, in order for the company to quickly increase its electricity generation capacity. The company has plans to develop power plants and invest in BIC to build its second cogeneration power plant project, and invest in renewable energy plants such as solar energy, wind power, biogas, and biomass, which take a relatively short time to construct. Additionally, the company has merger and acquisition plan for power plants in Thailand and overseas, both ones that are in business and ones under construction. Recently, GPSC has invested in Ichinoseki Solar Power - 1 GK, holding 99% of the shares to do solar power energybusiness in Japan, whose electricity generation capacity is 18 MW, as authorized by Japan’s Ministry of Economy, Trade and Industry (METI). However, GPSC has a plan to request an increase in the capacity to 20 MW. The project is expected to begin commercial operation in 2017. 3) Big win, or grow by investing in large power plants in Thailand and neighboring countries, so that the company can increase its electricity production capacity in the long run. The company has plans to develop and invest in power plants in Thailand and neighboring countries such as Myanmar, Laos, Cambodia, and Indonesia. 4) Adjacent and Support Opportunities, or to invest in relevant businesses, in addition to electricity business. GPSC has plans to expand its business in other relevant fields such as energy storage system and battery. GPSC has invested in 24M, whose core business is to research and develop Lithium-Ion battery. GPSC is also looking at Energy Service Company (ESCO) who offers total solutions for energy conservation and maximized energy utilization services by investing in the development of power distribution network, focusing on overseas markets where the power distribution network has insufficient coverage. The network development will help increase the need for electricity, and increase the investment opportunities in the local power plants. The company always tries to find new business opportunities to expand its business and generate growth.
As for performance, the company’s major revenues are from the sale of electricity, steam, and utilities to two main customer groups, namely (1) EGAT, PEA, and MEA as State Enterprises, and (2) Industrial Users. The revenue from EGAT, PEA, and MEA is quite steady as it is based on the long-term contract which clearly defines the volume and prices. However, the revenue from selling electricity, steam, and utilities to industrial users, might varies even though there is a long-term contract that clearly sets the minimum purchase and fixed price. The revenue from some industrial users can fluctuate depending on the clients’ production and maintenance schedule. GPSC has expanded its business by investing in many power plants. In 2013, it acquired shares in many electricity generation companies both in Thailand and overseas from companies under PTT Group. Some of those companies have already commenced their operations, while some are under construction. The revenue of GPSC Group will definitely increase in the future from the added revenue recognition from the companies that GPSC invested in.
In 2013, the total revenue of GPSC was 26,517 million baht, a 6.34% increase from 24,937 million baht in the previous year, due to the increase in the sale of its electricity. The company’s gross profit was 1,985 million baht, a 1.64% increase from 1,953 million baht in 2012. However, despite the increase in gross profit and the decrease in interest expense following loan repayment, the company experienced some setback from the currency exchange rate and legal disputes between the company and EGAT, which were a result of different interpretations of a contract, and have been ruled out by an arbitrator in 2013. As a result, in 2014, the company’s net profit was 1,166 million baht, a 6.03% decrease from 1,241 million baht in 2012.
In 2014, the company’s total revenue was 23,891 million baht, a 9.92% decrease from 26,517 million baht in 2013, because of the decrease in energy payment from the IPP electricity contract. EGAT ordered Sriracha Power Plant to distribute less electricity than stated in the contract, and to stop the production momentarily. However, such order resulted in the decrease in cost of natural gas, which depends on the production volume, and maintenance cost, which is based on hours of operation, accordingly. Therefore, it did not negatively affect the performance of the company. Meanwhile, the Central Utility Plants in Rayong saw an increase in its steam sale, so the gross profit for 2014 was 2,083 million baht, a 4.96% increase compared to 1,985 million baht in 2013. Additionally, as profits from affiliates and jointly controlled entities increase and interest expense decrease following the loan repayment, the net profit of the company in 2014 was 1,581 million baht, a 35.58% increase from 1,166 million baht in 2013.
“Thanks to the growth in the company’s businesses over the past few years, we have seen steady growth. This is because of the increasing needs for electricity, which boosts the sale of electricity gradually. The funds raised from the IPO will be spent on the expansion of business and as working capital, making GPSC’s financial status even stronger, creating a firmer building block for the next step. It will also boost investors’ confidence that the shares they invest have potential room for growth.” said Mr. Noppadol.
GPSC will arrange a Public Roadshow to provide the information regarding the IPO of GPSC to the general public on Wednesday 22 April 2015 from 9.00 AM – 11.30 AM at room 1101 11th Floor, the Stock Exchange of Thailand building. General public who is interested in joining the session during the abovementioned time is able to register for their interests in subscribing for GPSC shares. After the registration statement and draft prospectus become effective, tentatively during the first week of May 2015, the underwriters will consider the shares allocation and will inform those investors, accordingly.