PTT Global Chemical

PTT Global Chemical Plc (PTTGC)  

- 4Q14 net loss slightly worse than expected   

 

PTTGC's 4Q14 net loss was reported at B4.9bn, slightly worse than expected (versus B7.6bn net profit in 3Q14) as a result of stock loss and loss from aromatics business plus NRV of B15.8bn. Still, PTTGC posted normalized profit in 4Q14 since market GRM increased to US$4.9/barrel and olefins spreads widened 20.0%qoq on average. Overall, FY2014 net profit was B15bn, plunging 54.8%yoy, slightly worse than projected. 

 

- To rebound in 1Q15. Profit to jump 97.8%yoy in 2015    

 

We maintain our earnings forecast in 2015. PTTGC's profit is expected to revive significantly in 1Q15. Market GRM has risen from 4Q14; Singapore GRM has improved by 24.3%qoq since the beginning of 2015. Stock loss is expected to decrease. January olefins spreads weakened from 4Q14 but remained very high, while aromatics spreads are likely to stay unchanged as new supply has decreased in 2015. Overall, PTTGC's FY2015 net profit is estimated to revive by 97.8%yoy. 

 

- Laggard. Good entry point   

 

FY2015 fair value is B67.50. We reiterate BUY for the share price has overly absorbed negative factors. Current P/E ratio is only 9x, lower than the regional average. PTTGC's 2H14 dividend will be paid at B1/share (1.7% dividend yield); XD date is February 26, and dividend will be paid on April 24.