Bangchak Petroleum

3Q14 profit depressed by stock loss BUY

Bangchak Petroleum Plc (BCP)

- Stock loss to depress 3Q14 profit by 70%qoq

We estimate 3Q14 net profit at B380m, dropping 69.8%qoq. BCP is

projected to face US$4.5/barrel or B1.26bn stock loss. Marketing margin

has dropped from B0.80/liter in 2Q14 to B0.64/liter in 3Q14. Moreover,

insurance claim for property damage would not be booked like in 2Q14.

Profit from solar power business is expected to stay unchanged qoq.

Overall, 9M14 net profit is estimated at B3.2bn, dropping 19.3%yoy,

making up 79% of FY2014 earnings forecast.

- Recovery foreseen in 4Q14

We maintain our profit forecast for FY2014, projecting the profit in 4Q14 to

rebound from 3Q14 due to the following reasons. 1) Gross refinery margin

(GRM) is projected to rise in late 4Q14 from an approach of winter in many

areas worldwide. 2) The company would book lower stock loss because the

oil price would become less fluctuating during the rest of the year from an

increasing demand on seasonal effect, possibly standing at US$85-

90/barrel. 3) Oil sales through petrol stations would increase in 4Q14 as a

result of a tourism season at the end of the year. 4) The fourth quarter is

usually a high season of a solar farm since the intensity of sunlight during

the quarter has high potential for power generation, so profit from the

business would increase. Moreover, around B200m remaining insurance

claims can be expected in 4Q14 (still not included in our forecast).

- Buy. Average dividend yield is 5% p.a.

2014 fair value (DCF) is B36. We reiterate BUY for its potential for high and

steady profit growth. Dividend yield can be expected at 5% p.a. on average.