PTT

PTT Plc
 
Slightly above estimate: PTT posted a 4Q11 profit of Bt16,645m (EPS: Bt5.93), down by 23% QoQ and 24% YoY. The result exceeded our estimate by 6% (but fell 6% short of the Bloomberg consensus), driven by a better-than-expected performance by its coal business. 
Results highlights: EBITDA at the gas business plunged 41% QoQ to Bt9,880m. The flooding resulted in gas throughput being squeezed almost 8% QoQ to 3,919mmcfd. GSP product sales volume rose 8.7% QoQ to 1.5m tonnes in 4Q11, as the Ethane Separation Plant (ESP) resumed normal operations after a warranty shutdown in 3Q11. But a dip in the mean GSP product price in tandem with lower petrochem product prices outweighed the effect of the volume increase.
Oil business EBITDA declined 11% QoQ to Bt2,874m, due to higher administrative expenses. Furthermore, sales volume dipped 1% QoQ to 5,536m liters because of lower fuel oil and LPG sales, as flooding caused the suspension of operations at industrial plants (so less demand for energy).
On the flipside, coal business EBITDA strengthened further to Bt3,199m from Bt2,021m in 3Q11. ASP rose 6% QoQ to US$99.8/t and sales tonnages jumped 23% QoQ to 3.1m tonnes in 4Q11.
Outlook: We anticipate that the firm’s net profit will recover strongly in 1Q12. The absence of exceptional one-off expenses (the firm booked Bt6.45bn in 4Q11) and forecast bounces in refining and chemical unit performances will boost the 1Q12 bottom-line. But we expect only a mild improvement in PTT’s core gas performance. A 30-day warranty inspection at the sixth GSP will reduce aggregate production at GSP units, in our view.
What’s changed? Because of our recent earnings forecast revisions for its subsidiaries and MS’s upgraded oil price forecast, we have raised our PTT FY12 profit projection by 5% to Bt115,158m (up 9.4% YoY). Even if the protests over the recent NGV price rise were to prompt the govt to freeze the price, the downside risk to our FY12 forecast would be only 3%.      
Recommendation: Because of our earnings forecast upgrade, we have revised up our DCF-derived YE12 target price to Bt386 from Bt379. The recent under-performances of its subsidiaries makes PTT relatively more attractive—the current share price implies a core gas PER of only 6x versus a SET mean of 12x and an ex-PTT Utilities stock average of 10x.