Bangchak Petroleum

Bangchak Petroleum Plc (BCP)

1Q14 net profit Bt1.56bn (EPS=Bt1.13) exceeded SCBS and market estimates, rising
126.3% QoQ, as lower competition in the domestic market boosted profit from the
marketing business. Another factor was higher refinery GRM. 1Q14 accounted for 33%
of our full-year forecast but we expect 2Q14 to be lowered by a planned maintenance
shutdown. We maintain our 2014F with upside from insurance compensation.
Valuation looks undemanding at only 8.5x 2014F PE. We maintain BUY, with TP of Bt44.
Highlights:
Sales revenue rose 3.3% QoQ and 5% YoY on more power solar contribution (+5.8%
QoQ and +99.1% YoY) that offset the lower crude run at its refinery to 97.82kbd in
1Q14 (82% utilization) from 101.17kbd in 4Q13 and 99.95kbd in 1Q13.
Base GRM widened to US$6.41/bbl in 1Q14 from US$4.82/bbl in 4Q13 on higher
gasoline crack spread but was still below 1Q13’s US$8.1/bbl. With net gain from oil
hedging and inventory gain of US$0.47/bbl, accounting GRM was US$6.88/bbl,
down from US$8.1/bbl in 4Q13 and US$10.25/bbl in 1Q14.
Operating profit from the marketing business surged 402% QoQ and 39% YoY as
competition in the domestic market eased from 4Q13 from better regional market
conditions and lower ethanol cost. This lifted marketing margin to Bt0.67/liter in
1Q14 from Bt0.49/liter in 4Q13 and 1Q13.
Solar profit contribution increased 7% QoQ and 102.3% YoY. The jump YoY is due to
a full quarter of the second phase of its solar farm in Ayudhya after its late-1Q13
startup and the QoQ increase from the startup of the first unit of phase 3 in the
latter half of March 2014. At the end of 1Q14, 78MW capacity was operating.
EBITDA contribution from solar rose to 17% in 1Q14 from 15% in 2013.
Outlook for 2Q14F. The maintenance shutdown will cut crude run to 55kbd in 2Q14
with a higher GRM QoQ thanks to supply loss from regional refinery maintenance
shutdowns and greater proportion of local feedstock.