GUNKUL – Uniquely positioned to capture tailwinds

GUNKUL is uniquely positioned to capture high-margin growth from strong tailwinds, including government solar rooftop subsidies, the NBTC's 50% local content requirement on data center infrastructure, and continuous EPC backlog execution across national grid modernization and renewable energy projects, as well as upcoming PDP2026 power auctions. We maintain an OUTPERFORM rating with a mid-2027 TP of Bt6.2, based on a DCF valuation (WACC of 7.2%, terminal growth of 3%). GUNKUL remains our sector’s wildcard pick.

Positives on government measure plans for solar rooftops and data centers. We expect GUNKUL to benefit from recent government measures and policies, including: 1) Government measures supporting residential solar rooftops: The government is preparing to subsidize solar rooftop installation costs by Bt50,000/household for 1mn households, with registration starting in mid-October 2026, alongside a personal income tax deduction for solar system installations up to Bt200,000. Moreover, the NEPC and ERC approved the surplus electricity purchasing project at a rate of Bt2.20/kWh (net billing) with a capacity cap not exceeding 5kW AC per meter, while extending the power purchase agreement contract length from 10 years to 20 years. This should shorten the payback period by around 2-2.5 years, directly benefiting GUNKUL through higher electrical equipment sales and surging solar rooftop installation revenue; and 2) Local content requirements for data centers: As part of the economic subcommittee responsible for data center business development, the NBTC sets conditions focused on sustainability and local industry support by requiring that structural framing, construction work, and building electrical systems, such as cement, structural steel, electrical cables, and fiber optic lines, comprise at least 50% local content sourced from certified manufacturers in Thailand. This should directly benefit GUNKUL by driving higher EPC construction and trading revenue.

The outlook is expected to remain positive in 3Q26. We estimate GUNKUL’s core profit at Bt583mn in 3Q26, up 28% YoY and 4% QoQ, driven by strong YoY in revenue recognition from its backlogs in the EPC and trading businesses as well as the construction of solar power projects from renewable big lot phase 1, government transmission upgrades, and grid modernization projects. Moreover, we expect higher YoY and QoQ share of JV profit from its wind power plants, which benefit from higher wind speeds.

Valuation & recommendations. We maintain an OUTPERFORM rating with a mid-2027 TP of Bt6.2, based on a DCF valuation (WACC of 7.2%, terminal growth of 3%). We like GUNKUL, which is positioned to see the sector’s highest earnings growth of 31% in 2026, with continued growth of 12% and 38% in 2027-28 from new projects as Thailand transitions to green energy, along with a new contribution from the Philippines floating solar project, which starts contributing in 4Q27. Moreover, potential further upside includes upcoming PDP2026 biddings, which we have not yet included in our earnings forecasts.

Key risks: Lower return on new investments and regulatory changes. Key ESG risk is the social impact from upscaling of its EPC arm.