Shares of Banpu Plc, one of the largest coal energy companies in Asia, fell by 8.6% yesterday as investors dumped holdings in the wake of Thursday's 31-billion-baht court judgement against the company.
Banpu shares dropped to as low as 390 baht in early trade before rebounding to close at 404 baht, down 38 baht, in heavy trade worth 6.6 billion baht.
Overall, yesterday's decline cost the company more than 10.3 billion baht in market value.
It was the most active stock yesterday. Despite the decline, the overall Stock Exchange of Thailand (SET) index closed in positive territory, gaining 0.28% or 3.58 points to end at 1,286.26 in trade worth 39.5 billion baht.
Analysts said while Banpu is expected to appeal the verdict, investors cut their holdings on fears the judgement could take as many as two or three years of future profits away from the firm.
On Thursday, the Civil Court ruled in favour of a suit filed by Siva Nganthavee against Banpu.
Mr Siva had accused Banpu and its management of deception in a joint development agreement with the aim of gaining information about a coal mine concession and feasibility reports for a lignite-fired power plant in Hongsa, Laos.
Mr Siva also accused Banpu of "misinforming" the Lao government, resulting in his concession being cancelled and later awarded to Banpu.
The Civil Court awarded Mr Siva damages of 4 billion baht and additional compensation for opportunity losses of 860 million baht per year from 2015-27 and 1.38 billion baht per year from 2028-39.
Mr Siva had sought damages of 63.5 billion baht.
Banpu, in a statement to the SET, said it will appeal the judgement and that the ruling will have no effect on the ongoing Hongsa power project.
A Banpu spokesperson said a public briefing on the case will be held on Monday.
Mr Siva won a concession from the Lao government in 2000 with a plan to develop a coal-fired power plant for electricity sales to Thailand.
In 2004, Banpu entered into a joint venture with Mr Siva's Thai-Lao Lignite Co to develop the project.
But the development of hydroelectric projects such as Nam Ngum 2 and Nam Theun 2 received precedence for electricity sales from the Electricity Generating Authority of Thailand, resulting in the Lao government eventually scrapping Mr Siva's concession in 2006 for lack of development.
Later, the Thai government revised its own power plans, leading to the Lao government reopening bids for the Hongsa concession, which was won by Banpu and other partners in 2008.
"The size of the judgement is up to 31.9 billion baht, equal to two or three years' profits. It's no surprise that investors are panicking," said Songklod Wongchai, an analyst at Finansia Syrus Securities.
The securities firm said full payment will reduce Banpu's share value by more than 83.55 baht per share.
If Banpu pays only the initial 4 billion baht damage award next year, then it could potentially cut 2013 earnings by 30%, which the broker said would result in the target share price cut to 450 baht.
Asia Plus Securities, meanwhile, cut this year's earnings forecast for Banpu to a net loss of 19.2 billion baht from earlier forecasts of a profit of 11.7 billion as the company sets aside reserves against the judgement.
Nalinrat Kittikumpolrat, an analyst at Asia Plus Securities, said the company changed its recommendation from buy to hold, but long-term investors should maintain their holdings, as coal prices are expected to rebound with global demand and new central bank stimulus.
Banpu posted a first-half net profit of 5.5 billion baht on revenue of 62.3 billion.
For 2011, the company posted a net profit of 20 billion baht on revenue of 127 billion.
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Source: http://www.news.thethailandlinks.com/2012/09/22/banpu-shares-plunge/
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