GEG – 19/01/2018 – Company Note

• GEG possesses a total of 83.37MW of hydropower generation capacity both directly and indirectly through its subsidiaries. GEG plans to be a major participant in its parent company TTC’s aggressive renewable energy development plans
• The company’s near-term focus will be on 2 large solar power projects in its pipeline. The company’s prospects in solar energy seem to be underpinning the current valuation premium to peers.
• Significant capital will be needed to finance the new solar projects, but the funding mix is uncertain implying indeterminate dilution risk. The 2 new solar facilities will add 45-50% to both current revenue and gross profit when they reach steady state

Gia Lai Electricity JSC was established in 1989 and is a small hydropower generation company. GEG recently switched its focus to solar energy and has two large solar power plants in the pipeline for the next two years under the guideline of major shareholder Thanh Thanh Cong Group (TTC). We expect that the solar foray might support a further valuation lift over the medium-term.

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