Overview of Banpu Public Co Ltd

Banpu Public Co Ltd is a regional coal producer with a diverse portfolio of mines in Indonesia, Australia, Mongolia, and China, boasting total equity reserves of 713 million tons. In addition to its coal business, Banpu is a key player in power generation through Banpu Power, where it holds a 78.7% stake.

Stock Analysis and Market Performance

Currently, Banpu’s share price stands at Bt5.60, with a target price set at Bt5.10, indicating a downside potential of 8.9%. The company has experienced a challenging year with its stock reaching a 52-week high of Bt9.25 and a low of Bt4.44. The major shareholders include the Vongkusolkij family with 17%, NVDR with 16%, and State Street Bank Europe Ltd. holding 6.7%.

Strategic Insights from Banpu’s Analyst Meeting

The recent analyst meeting conveyed a neutral tone, with the coal market beginning to stabilize amidst robust regional demand. High calorific value (HCV) coal prices are expected to remain stable year-over-year in 2025, supported by export limitations from Australia and steady demand from Japan, Korea, and Taiwan. However, the low calorific value (LCV) coal market may face downward price pressure due to new supply from Indonesia.

The gas business, however, continues to face hurdles due to high inventory levels, leading to a projected decline in gas selling prices during the winter season. Despite this, a recovery in gas selling prices is anticipated in 2025, aided by reduced US gas production and supportive US policies following the elections.

Financial Performance and Projections

Key financial metrics for Banpu highlight a mixed performance. The company reported a net turnover of Btm179,619 in 2023 and projected figures for 2024-2026 show a modest increase. EBITDA margins are expected to hover around 19-21% in the coming years, with net profits anticipated to recover significantly by 2025, reaching Btm5,948.

Banpu’s strategic initiatives in cost reduction and operational efficiency are expected to positively impact its financial outcomes, especially with a focus on lowering the stripping ratio of coal operations.

Future Growth Prospects with BKV Corporation

BKV Corporation, where Banpu holds a 76% stake, is poised for growth post-IPO, driven by planned projects and mergers and acquisitions. The company is set to launch a new carbon capture, utilization, and storage (CCUS) project in 2026, enhancing its operational capacity. Banpu is projected to benefit from BKV’s growth, with contributions expected to range between Bt60m-65m in 2025.

Valuation and Recommendation

Despite the challenging market environment, Banpu maintains a “HOLD” recommendation with a revised target price of Bt5.10, based on a regional core PE mean of 8.5x. While there are short-term positive indicators in the coal business, long-term concerns persist due to potential increases in supply from US fossil fuel policies and accelerated coal production in Indonesia.

Environmental, Social, and Governance (ESG) Initiatives

Banpu is committed to a greener and smarter strategy to combat climate change. The company aims to increase its renewable energy capacity to over 1.1 gigawatts by 2025 and reduce greenhouse gas emissions significantly. Socially, Banpu is focused on community development around its operational regions, and its governance strategies emphasize sustainable corporate practices and ESG responsibility within its supply chain.