PTT

LPG to boost fair value by Bt20 BUY

PTT Plc

- LPG, oil price restructuring proceeds

According to an informed source from the Ministry of Energy, an energy

price restructuring plan is going to be considered at the National Energy

Policy Council (NEPC)’s meeting in November 2014 to seek approval and a

guideline for the restructuring of gas and oil prices and oil excise tax. The

price restructuring consists of two issues: 1) gasoline, gasohol, and diesel

prices, and 2) LPG price. For LPG, the ex-gas separation plant selling price,

which has been fixed at US$333/ton (B10.7/kg), will be reviewed, compared

with the current global price is US$605/ton.

- Fair value to increase B20 if LPG price raised to cost

The LPG price restructuring will directly affect PTT. Up until present, an exgas

separation plant selling price of LPG has been fixed at US$333/ton

(around B10.7/kg), while the actual production cost of PTT is US$500/ton

(around B16.1/kg). According to our study, if the ex-plant selling price is

increased to equate to the cost at US$500/ton, which is the most possible

scenario, FY2015-2016 profit of PTT will rise by 9.7% and 9.2% from the

current forecast, respectively, and fair value will increase by B20/share.

However, if the ex-plant selling price is increased to equate to the global

price at US$600/ton, FY2015-2016 profit of PTT will rise by 15.6% and

14.7% from the current forecast, respectively, and fair value will increase

by B32/share.

- Energy price restructuring is upside for 2015 fair value of B405

Preliminarily, we maintain our current forecast while waiting for a conclusion

about the price restructuring. Fair value (DCF) is estimated at B354 in 2014

and B405 in 2015. We reiterate to buy PTT; the share price still has an

upside from the restructuring of energy price to reflect the real market

price.