PTT Global Chemical

PTT Global Chemical Plc (PTTGC)

  

- Net profit expected in 1Q15 from refinery and aromatics businesses  

We project PTTGC to revert to net profit of B5.4bn in 1Q15, versus net loss of B4.9bn in 4Q14, thanks to improving earnings from the refinery and aromatics businesses. For the refinery business, stock loss would decrease significantly and GRM would increase around US$1/barrel on a seasonal effect in 1Q15. For the aromatics business, Px-condensate and Bz-condensate spreads are projected to become narrower; yet, overall market product to feed margin would still increase 34.1%qoq from decreasing condensate cost following crude oil prices, which would also make fuel loss decrease significantly. For the olefins business, earnings are projected to weaken from the previous quarter due to decreasing spreads of core products. Overall, 1Q15 net profit is projected to make up 18.1% of our FY2015 forecast. 

- Olefins is hero in 2015   

We maintain our FY2015 forecast, projecting the profit to gradually rebound in the rest of the year. The olefins business will be playing an important role in boosting PTTGC’s profit, particularly in 2H15 after the refinery business enters a low season while GRM may also weaken as a result of increasing supply globally. Similarly, a projected growth of aromatics supply in 2H15 may depress overall aromatics spreads. In conclusion, FY2015 profit is anticipated to show as much as 97.8%yoy growth. 

- Lowest P/E ratio among peers. BUY reiterated  

2015 fair value is B67.50. We reiterate BUY; its current P/E ratio is only 9.5x, which is lower than the regional average; dividend yield can be expected at 5.4% p.a.