Thai Oil

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Thai Oil Plc

- Full utilization rate to lead to double profit growth in 2015

GRM and spread in 2015 are projected to stabilize from 2014, but increasing

production volume as a result of resumption of TOP’s refinery and aromatics

plant after a major turnaround in 2014 would help boost the profit growth in

2015. Also, TOP has been interested in overseas investment. The company

is currently planning to join an auction for an improvement project of

Thanlyin refinery in Yangon, Myanmar; if TOP wins the auction, it will be the

beginning of its investment in Myanmar, which has very high economic

growth potential.

- Strong profit growth projected in 2015

We project TOP’s earnings to revert to net profit in 4Q14, under the

assumption that stock loss will decrease from 3Q14 as Dubai crude oil price

is estimated at US$85-90/barrel on average in December. In addition, GRM

is projected to rise during winter in late 4Q14 and 1Q15 (high season) and

TOP’s refinery and aromatics plant have now run at their full capacity after

around one-month maintenance shutdown in 3Q14. Overall, the profit is

estimated to decline 69.4%yoy in 2014 and then show more than double

growth in 2015 from the full resumption of the refinery and aromatics plant.

- Already bottom out. Upgrade to BUY

We upgrade our recommendation from HOLD to BUY. The share price has

decreased more than 15% over the past one month to reflect an excessive

decline of the oil price that had caused stock loss; the current share price

implies more than 15.5% upside from 2015 fair value (DCF) of B52.