PTT Global Chemical

PTT Global Chemical Plc (PTTGC)  

 

- Net profit seen in 1Q15 as expected 

 

PTTGC rebounded to net profit of B5.6bn in 1Q15, in line with our projection, versus net loss of B4.9bn in 4Q14, thanks to improving earnings from the refinery and aromatics businesses. For the refinery business, loss from oil and aromatics inventory plus NRV decreased from B15.8bn in 4Q14 to B915m, while GRM increased US$1.07/barrel on a seasonal effect to US$5.98/barrel in 1Q15. For the aromatics business, market product to feed margin rose 33.5%qoq to US$219/ton as condensate cost has fallen following crude oil prices, which also made fuel loss decrease significantly. In addition, aromatics plant utilization rate has returned to a normal level of 89% after a shutdown in the previous quarter. Overall, 1Q15 net profit made up 18.9% 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 9.7x, which is lower than the regional average; dividend yield can be expected at 5.3% p.a.