Enters Microgrid and VPP Businesses
The author is an analyst of NH Investment & Securities. He can be reached at hyundong.lee@nhqv.com. -- Ed.
Nuri Telecom is expected to book sluggish earnings this year, affected by a decline in exports amid the Covid-19 crisis. However, the company stands to benefit from KEPCO’s AMI expansion efforts for households. We believe that an earnings rebound is likely on its new microgrid and VPP businesses.
To benefit from KEPCO’s AMI expansion efforts
Nuri Telecom offers advanced metering infrastructure (AMI) solutions covering the collection of electricity/water/gas meter data to utility rate calculation. Expanding its service offerings, the firm now operates in the smart grid and microgrid arenas.
AMIs are mainly divided into high-voltage AMIs for industry and low-voltage AMIs for households. Nuri Telecom boasts a 90% share of the domestic high-voltage AMI market and a 97% share of the low-voltage wireless AMI market. Accordingly, the company stands to benefit from KEPCO’s AMI expansion efforts. Nuri Telecom’s domestic sales are estimated to surpass W40bn pa, considering the expected penetration of AMIs for households through 2022 and installation of AMIs for 5mn apartment units by 2025.
As of 2Q20, Nuri Telecom had an order backlog of W33.8bn, and this year, the firm is expected to book sales of W83.7bn (-43% y-y), as exports should shrink in line with limited overseas operating activity amid the Covid-19 crisis. But, we believe that maintenance/repair and capacity addition orders for projects the firm has conducted in Norway, Ghana, and Vietnam are likely in 1H21.
Diversifying business portfolio to include microgrids and VPPs
Nuri Telecom has embarked on new energy businesses along with local governments, based on microgrid and VPP technologies. Supplying power to a specific region independently from an existing grid, microgrids are anticipated to enable efficient power management based on renewable energy sources. In addition, the firm’s VPP business is expected to become a new growth engine from 2021, as it promises to allow for stable power supply based on the integrated operation of distributed resources in cooperation with local governments and industrial complexes.