Thai Oil
BUY Q2 2012A: Huge loss was as expected
Thai Oil Plc
Stock loss slashed profits. TOP’s 2Q12 net loss of Bt6.9bn was in line with SCBS’s
estimate but below market expectations. Key factor behind this was a huge stock loss
of US$10.4/bbl (~Bt8.6bn). Without this loss, operating profit edged down 3.8% QoQ on
weaker PX spread. We believe if oil price can be sustained at current levels and margins
improve seasonally for its refinery and petrochemical businesses, our earnings forecast
for 2012F will be achievable. We maintain our BUY rating with TP of Bt72/share. Weak
earnings should be priced in, in our view.
Key highlights:
- Market GIM improved from US$6.7/bbl in 1Q12 to US$7.2/bbl in 2Q12 on improved
GRM (up from US$4/bbl to US$4.6/bbl) and higher spread for its lube oil business.
- Integrated intake dropped slightly QoQ from 300kbd to 294kbd on lower utilization
of the refinery due to a 14-day maintenance shutdown in May to change catalyst.
- Product spread for PX weakened by 12% QoQ to US$122/t due mainly to lower PX
price. Utilization of aromatics unit was stable at 82%.
- With more favorable demand for lube base oil and bitumen, product to feed
margin of this business increased by 8% QoQ. This was also behind higher
utilization rate of its plant from 101% in 1Q12 to 105% in 2Q12.
- FX loss of Bt578mn vs. FX gain of Bt1.2bn in 1Q12 also weakened earnings QoQ.
