Reversal of fortune at PTT’s high-return gas value chain. We believe that 2021 is the first year that PTT would see a structural decline in returns of its core gas business which had earlier enjoyed the benefits of a cost-plus structure with limited to no competition. Overcapacity in the value chain means higher cost; hence, more pressure on PTT to give in on its return in order to control end-consumer tariffs from rising too high. In 2020, significant progress has been made on the regulatory front to allow buyers of gas to import LNG to fulfill part of their needs under phase 2 of the Gas Liberalisation Plan starting 2021. Clearer growth path for private power producers. We expect power tariffs in Thailand to stay high if not higher. In the latest revision of Power Development Plan (PDP), we do not see signs of the government’s attempt to reduce cost. Strategically, PTT is in defensive mode while its power business is lagging behind competitors’. Gas liberalisation would give private power producers like BGRIM higher bargaining power in securing cheaper gas, eliminating its cost disadvantage against the national grid and providing a solid base for market share gain. We see very large potential for market share gains both through small power producers (SPPs) and smaller captive plants for industrial users (IUs). Downgrade PTT to UNDERPERFORM and Initiate on BGRIM with OUTPERFORM. We downgrade PTT from Neutral to an UNDERPERFORM with a new TP of Bt39 by assigning a bigger holding company discount of 20%. The upcoming listing of PTTOR in February would leave PTT with its shrinking core gas business. Though the negative impact from liberalisation on PTT would be small and gradual, investors can gain direct exposure to the cyclical recovery of PTT’s business through its listed downstream affiliates. PTT trades at a 9% premium to its SOTP while we see more reasons for the holding company discount to widen. We initiate on BGRIM with an OUTPERFORM rating. We expect BGRIM to benefit from the liberalisation of gas business with a solid long-term growth plan in power business. Our earnings forecasts for PTT and PTTEP are revised up 8% and 28%, respectively, in FY21 to reflect CS’s higher oil price assumptions.