PTT Global Chemical
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Hope for rebound in 2015 BUY
PTT Global Chemical Plc (PTTGC)
- 3Q14 profit grows 24.7%qoq as projected
3Q14 profit was reported at B7.6bn, growing 24.7%qoq (as projected) since
B1.2bn non-recurring expense from impairment of Vencorex booked in
2Q14 was not recognized in this quarter. Excluding extraordinary items,
3Q14 normalized profit stayed flat at B7.3bn. Profit from petrochemical
(mainly olefins) business compensated for loss of B3.1bn from stock loss
and loss from aromatics business plus NRV. Overall, 9M14 net profit was
B20bn, dropping 22.8%yoy, making up 72% of FY2014 earnings forecast.
- Profit to continue growing in 4Q14, 2015
We maintain FY2014-2015 earnings forecast. 4Q14 net profit is expected to
grow by 4%qoq as stock loss is projected to drop thanks to less volatile oil
price. GRM is anticipated to rise in late 4Q14 as winter is high season, and
profit from olefins business is expected to grow and make the year's peak
thanks to high spread. PTTGC's earnings are projected to drop by 16.3%yoy
in 2014, and then revive by 15.0%yoy in 2015.
- Undervalued. Good entry point
We switch to use FY2015 fair value of B75. We reiterate BUY as the current
share price has overreacted to negative factors. P/E ratio of 9.6x is lower
than the regional average of 13.5x. Dividend yield is 5%p.a on average.
