Thai Oil

Stock loss may put 3Q14 into loss HOLD

Thai Oil Plc (TOP)

- 3Q14 may face massive loss of B2.1bn

We project TOP to face net loss of as much as B2.1bn in 3Q14, versus net

profit of B2.1bn in 2Q14, mainly from stock loss plus LCM of US$6/barrel or

B3.8bn in total and lower utilization rate of its refinery and aromatics plant

from 95% and 79% in the previous quarter to 85% and 64%, respectively,

as a result of a major turnaround during June 15 – July 31. Overall, 9M14

profit is estimated at B2.5bn or a decrease of 75.8%yoy, accounting for

32% of our FY2014 forecast.

- FY2014-2015 earnings forecast revised down

We revise down TOP's FY2014-2015 earnings forecast (See page 3). Dubai

crude oil price has dropped by over 22% from end-2Q14 to US$85/barrel,

depressing refinery and petrochemical businesses. FY2014 earnings forecast

is revised down to reflect stock loss, while FY2015 earnings forecast is cut

under the assumption that aromatics spread drops by US$50/ton as spread

and selling price would be depressed by lower oil price. Under the new

forecast, TOP's net profit is estimated to plunge by 69.4%yoy in 2014, and

then revive by 121.2%yoy in 2015.

- Reiterate HOLD

Under the new forecast, 2014 fair value (DCF) is B50 (down from B56

previously). We reiterate to hold TOP, believing that the share price’s

decline has partly reflected the negative factors and the profit likely has

already hit the bottom of the year in 3Q14.