Global Power Synergy: RPCL: A source of cash
- Plans to spend THB470mn to acquire additional 9% stake in RPCL, with execution expected in 3Q26F
- This is expected to have minimal impact on financial statement; yet, good source of cash, with estimated IRR of 10%, in our view
- 4Q25F to be lifted by downtrend in pooled gas cost but dragged by falling LNG spot prices
- Maintain HOLD with FY26F TP of THB37
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The transaction value is c.USD14.25mn, or THB470.25mn (based on an exchange rate of THB 33/USD). Post-acquisition, GPSC’s holding in RPCL will increase to 17,854,687 shares, representing 24.38% of RPCL’s total issued and paid-up shares — up from its previous ~15% stake.
Upon completion, RPCL will be reclassified from an investment measured at fair value through other comprehensive income to being recognised as an associate company of GPSC.
Neutral view – minimal impact to business performance in 2026F. We maintain a neutral stance on the additional stake in RPCL. Despite the attractive acquisition cost per MW at THB3.6mn (vs. initial construction cost of THB23bn, or THB16.4mn/MW, in 2006-2008, and a THB30-40mn replacement cost), the power purchase agreement (PPA) has a remaining lifespan of eight years. During this period, revenue from the availability payment is on a downtrend (with the availability factor averaging 85%-90% in 2024), and the dispatch rate from EGAT is minimal. Electricity generation dropped from 3,500Gwh in 2008 to as low as 608Gwh in 2023.
We expect the deal to be executed in 3Q26F, with equity income projected at THB150-200mn per year. However, we believe that GPSC’s focus is on the cash flow from RPCL. As one of Thailand’s largest base-load independent power producers (IPP), its revenue base remains strong. Moreover, there are long-term options for GSPC when the PPA contract expires in 2033. These options include life extension, repowering, liquidation, or replacement.
Source of cash ahead with expected IRR of c.10%. Even though we anticipate a minimal impact on the profit and loss statement, we are positive about the potential cash flow that GSPC could receive until the PPA expires in 2033. First, we estimate an internal rate of return (IRR) of c.10.5%, based on annual incremental dividend income of c.THB90mn for the remaining eight years. Secondly, we expect a capital reduction from RPCL, where total registered capital stands at THB7.32bn. Thirdly, we expect cash from the disposal of unused assets/land and working capital in the event of liquidation at the expiration date.
Moreover, should RPCL be granted a replacement option from the Ministry of Energy, we expect the capex/MW for the construction of a new IPP power plant to be THB30-40mn per MW, taking Glow Energy phase 2 and Glow SPP2 replacement projects as references.
Potential one-time accounting gain in 3Q26F. We expect the purchase to be executed in 3Q26F, as GPSC needs to obtain approval from the Energy Regulatory Commission (ERC). As the total stake increases from 15% to 24%, GPSC will reclassify RPCL from an other investment (dividend income realisation) to an associate company (equity income). As a result, there could be a potential one-time accounting gain from this reclassification. The gain amount depends on many factors, such as the appraiser’s judgement, fair value calculation, and the percentage of ownership to be measure.
4Q25F expected to be lifted by falling gas price despite THB0.04/unit Ft rate cut. The ERC announced a revised electricity tariff of THB3.94/unit for Sep-Dec 2025, down slightly from THB3.98/unit in May-Aug 2025. This reflects a lower Ft rate of THB0.1572/unit (vs. THB0.1972/unit previously), driven by a clawback of THB2.64bn from EGAT.
Despite the Ft rate cut, we expect wider margins in 4Q25F. This is supported by a sharp drop in pooled gas cost. Thailand’s pooled gas price declined from THB283/mmbtu in June 2025 to THB277.31/mmbttu in July 2025. This is driven by lower global spot LNG prices (USD12.30mmbtu vs. USD13.12/mmbtu in June) caused by low demand in North Asia during summer and higher gas inventory in Europe at 77%.
We carry out a sensitivity analysis and found that every THB1.0/mmbtu drop in gas cost results in higher net profit of THB25mn/year. On the other hand, every THB0.01/unit drop in the Ft rate would result in a THB50mn decline in net profit.
Given the current situation, we estimate net impact to net profit at c.THB140mn in 4Q25F. This is based on i) a Ft rate cut by THB0.04/unit and ii) gas cost reduction by THB30/mmbtu (note that GPSC gas cost stood at THB329/mmbtu).
Share price factored in positives; maintain HOLD. GPSC’s share price appreciated more than 10% in less than a month, factoring in the expected recovery in business performance in 2H25F. However, we remain cautious on regulatory risks on the domestic front, given uncertainty over electricity tariff cuts by the government, as the new single pooled gas formula remains unclear. Moreover, it is highly likely that the new Ft rate for 2026F will be either lower than the current level or remain unchanged, while high natural gas cost is expected during winter. Thus, we maintain HOLD with an FY26F TP of THB37 based on a DCF valuation with a WACC of 10.07%.
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