19 percent increase in net profit forecast for EDL-Gen this year

19 percent increase in net profit forecast for EDL-Gen this year

EDL-Gen, one of the largest electricity generating firms in Laos, expects to see a 19 percent increase in net profit this year after taking over shares in the four Independent Power Producers (IPP) from Electricite du Laos.

According to the stockbroker BCEL KT, which reports on the performance of EDL-Gen to stock investors, the public company will generate a net profit of US$85 million this year, a 19 percent increase compared to the previous year thanks to its growing production capacity.

The company has already made a net profit of US$25 million in the first six months of this year, according to the report.

BCEL KT made the projection after EDL-Gen completed the takeover of shares owned by Electricite du Laos in the four IPPs.

The electricity generating firms paid US$200 million to purchase Electricite du Laos' shares in IPP projects in the middle of this year, enabling the public company to boost its electricity generating capacity from 387MW to 881MW.

EDL-Gen plans to purchase two more hydropower plants from EDL which are currently under construction - Huaylamphan Nhai and Namkhan 2.

It is still unclear when EDL-Gen will complete the acquisition of the new power plant shares as it has to mobilise funding from capital increase. Domestic and international market conditions and confidence in EDL-Gen will be key to the success of EDL's capital mobilisation.

BCEL KT estimates that once EDL-Gen completes the takeover of share, it will generate more profit. At present, the stockbroker is forecasting that the power company will make a net profit of about US$108 million in 2013 and US$113 million in 2014.

Over the first six months of this year, it generated net profit of US$25 million kip and paid before tax dividend of 154 billion kip or 178 kip per share. In 2011, EDL-Gen generated net profit of about US$70 million. It paid before tax dividend of 432 billion kip to shareholders or 498 kip per share.

In March the Lao government approved an increase in the price of electricity charged to consumers. Many observer s expect this will stimulate private investment in the development of hydropower in Laos. Electricity consumption in the country is increasing due to strong economic growth.

EDL-Gen is one of two public companies listed on the Lao stock market. Its share price is currently 4,900 kip

vientiane times