IRPC

To revive after Phoenix complete in 4Q15 BUY

IRPC Plc

3Q14 net profit is B22m, in line with projection

IRPC reported 3Q14 net profit at B22m or a plunge of 87.6%qoq as projected,

entirely as a result of extraordinary items, which are insurance claims for

property damage from the fire accident, refund of the remaining prepaid

rental fee after the company has terminated a lease agreement for TPI Tower

building, gain from selling of shares in United Grain Industries Co., Ltd. to

Liaopairattana Co., Ltd., and a tax credit from amortization of bad debt. In

terms of normalized earnings, however, the company still faced loss of B1.8bn

in this quarter, mainly because of stock loss. Overall, 9M14 profit is B544m,

increasing from B42m in the same period last year and representing 88% of

our FY2014 forecast.

Profit to triple in 2015

We maintain our profit forecast for FY2014-2015, expecting to see net profit

in 4Q14 despite risk of continued stock loss. Preliminarily, stock loss is

projected to lower from 3Q14 as oil demand is increasing in 4Q14 as a result

of a high season (winter) in many areas worldwide and rising GRM at the end

of the year. Spread of olefins products would remain high close to that of

3Q14, while there is also a benefit from Delta Program in 4Q14. In addition,

insurance claims for the business interruption can be expected approximately

at B600-700m. Overall, the profit is estimated to decrease 25.0%yoy in 2014

but grow more than threefold from the prior year in 2015.

Buy for long term

We change to use 2015 fair value at B4.08; BUY is reiterated. The share price

likely has already declined to reflect negative factors, while in the long run the

company still has potential to show strong profit growth from its investment

plan, especially after Phoenix project is complete in 4Q15 since it will help

upgrade IRPC’s profit to a stronger and steadier status.