PTT

PTT Plc

 

 - Net profit seen in 1Q15 as projected  

PTT reverted from net loss of B27bn in 4Q14 to net profit of B22.6bn in 1Q15 as projected because the company did not have to book an extraordinary expense in this quarter. Normalized profit grew 47.5%qoq because 1) stock loss (LCM included) from the refinery business dropped significantly and overall GRM rose 25.0%qoq, 2) loss from NGV decreased following increasing retail price of NGV, and 3) ex-plant LPG price has been increased to US$498/ton, effective since February 2, 2015. Overall, 1Q15 net profit made up 22.3% of our full-year forecast. 

- Profit to grow continuously in the rest of 2015  

We maintain our profit forecast in 2015-2016, projecting profit in the rest of 2015 to increase continuously since 1Q15 onwards. The petrochemical and gas separation businesses would keep PTT’s profit high in 2Q15; petrochemical prices and spreads have risen and the refinery business will suffer lower stock loss or even revert to stock gain as the oil prices have increased. Profit from olefins business would improve and stock gain will benefit the company until 2H15. Overall, FY2015-2016 profit growth is estimated at 81.5%yoy and 17.9%yoy, respectively. 

-  P/E ratio lower than peers. Fundamental factors strong  

FY2015 fair value (DCF) is B402.50. We reiterate to buy PTT. P/E ratio is only 9.9x in 2015 and 8.4x in 2016, lower than the sector’s average.