PTT
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3Q12's net profit to increase significantly qoq
Current price (B) 322.00
Fair Value (B) 390.30
Market cap (B bn) 919.72
- 3Q12’s profit to skyrocket 303.4%qoq mainly from PTTEP
and refinery
- Likely to revise up 2012’s profit forecast to reflect
extraordinary item…profit to stabilize in 4Q12
- Buy. Share price still laggard peers
CGR
-3Q12’s profit to skyrocket 303.4%qoq mainly from PTTEP
and refinery
We estimate 3Q12’s net profit at B34.3bn, thriving magnificently by
303.4%qoq due to following contributions. 1) Profit of PTTEP in
3Q12 has increased significantly by 126.6%qoq from the 10.9%qoq
growth in sales volume after recognition of Bongkot South project
for a full quarter and increasing oil sales from Vietnam 16-1 project.
Moreover, there was not an extraordinary expense, Montara
project’s impairment of asset, like it was in 2Q12. 2) There would be
a stock gain and a reversal of LCM of refinery business due to oil
price in 3Q12 which has risen from 2Q12 as well as GRM which has
hiked by 70%qoq to US$7.8/bbl, making share of profit from
subsidiaries stand at B10bn in 3Q12 compared with a loss of B4.3bn
in the previous quarter. 3) There would be a stock gain for PTT at
around B245m comparing to a loss of B2.9bn in 2Q12. 4) Sales
volume of natural gas and products from the gas separation plant
would increase respectively by 2.5%qoq and 4.4%qoq, while
average product selling prices would stay flat. 5) There would be a
FX gain of around B1.9bn, reversing from a FX loss of B2.3bn in the
prior quarter. However, negative factors to depress profit in 3Q12
are 1) a loss of B2bn from hedging of the oil trading business and 2)
a loss from NGV business which increased by 13.6%qoq to B5bn.
Overall, net profit in 9M12 stood at B80.2bn, dropping 9.5% from
the same period last year and comprising 80% of our FY2012’s
profit forecast.
- Likely to revise up 2012’s profit forecast to reflect
extraordinary item…profit to stabilize in 4Q12
We are likely to revise up our 2012’s profit forecast after 3Q12’s
earnings report to reflect extraordinary items we have still not
included in our forecast. However, we project norm earnings in
4Q12 to stay flat from 3Q12 as core business of PTT would benefit
from the adjustment of pricing formula for petrochemical raw
material purchase between PTTCG and PTT that has made PTTGC’s
cost of raw material increase by US$40/ton (effective since 1 August
onward). For the refinery and petrochemical businesses run through
subsidiaries, GRM and petrochemical spread would stabilize close to
that of 3Q12.
-Buy. Share price still laggard peers
We recommend buying PTT. 2012’s fair value, using DCF and sum of
the parts, is B390.33/share. Earnings in 2H12 tend to bounce back,
while the share price has still been laggard peers. Dividend yield is
projected at 4%p.a.
