PTT

PTT Plc 

- CEPA raises NGV price for the third time by B0.5/kg  

 

The Committee on Energy Policy Administration (CEPA) resolved on January 30, 2015 to 1) increase NGV retail price by B0.5/kg to B13/kg, effective from January 31 on, directly benefiting PTT since it has been selling NGV at a lower price than the production cost of B15/kg and 2) float LPG retail price, effective from February 2 on; CEPA will restructure the LPG retail price every month in order to reflect the actual cost. This would have no effect on PTT since the price increase would come from an increase of taxes and levy to the oil fund.   

 

- To benefit profit since 2015 onward. Revising forecast      

 

We are currently revising PTT's earnings forecast since 2015 onward. The B0.5/kg NGV price hike is projected to help decrease PTT's loss from NGV sales from B16bn/year to B10bn/year and boost the fair value by B4 to B398. For the best-case scenario that NGV price is raised to the same level as the production cost, the fair value would increase by B16 to B414. However, if impairment loss of PTTEP and stock loss from the refinery business in 4Q14 are included (not included in our forecast yet), the fair value would be B394. We will revise our forecast and fair value again after a company visit on February 4, 2015. 

 

- Buy. Fully benefiting from fuel price restructuring      

 

FY2015 fair value (DCF) is B394. We reiterate BUY for full benefits from the fuel price restructuring and extraordinary profit from subsidiaries, i.e. BCP, SPRC, and GPSC (not included in our forecast yet).