The Bangchak Petroleum

The Bangchak Petroleum Plc (BCP)
 

4Q12’s net profit hikes 6.4%qoq mainly from insurance compensation
We estimate 4Q12’s net profit of BCP at B1.14bn, increasing 6.4%qoq due
mainly to the following extraordinary items: 1) recognition of insurance
compensation (property damage) of B300m from the total allowance of
B800m (the rest B500m will be recognized in 1H13) and 2) a reversal of
asset impairment for a 20-rai land in Srinakarin because the land value has
increased to B100m. However, norm profit is projected to decrease by
18.0%qoq to B847m because 1) in 4Q12 there is not a large stock gain like
in was in 3Q12 (at of US$6/bbl) but a stock loss of US$2/bbl and 2) base
GRM in 4Q12 is anticipated to decrease to US$10/bbl from US$14/bbl in
3Q12. Nevertheless, overall profit will still be sustained by rising production
capacity after the main refinery unit of BCP (with capacity of 80,000 bbl/day)
that had been damaged from the fire accident could resume its commercial
run by the end of October 2012, which would increase total utilization rate in
4Q12 to 85,000 bbls/day from 39,000 bbls/day in the prior quarter. Overall,
total GRM in 4Q12 is estimated at US$9/bbl, down from US$21/bbl in 3Q12.
Moreover, marketing margin is projected to rise 47%qoq to B0.65/liter. This
is another factor to boost the profit in 4Q12. Overall, we estimate FY2012’s
net profit at B4.26bn, a 24%yoy decrease and 12% higher than our previous
estimate which has still not included extraordinary items in 4Q12.

Up 2013’s profit forecast…norm profit to rise in 4Q12
We have a positive outlook toward the profit in 2013; continuous growth is
foreseen. Finished oil sales are projected to increase from a resumption of all
refinery units with total capacity of around 110,000 bbls/day for a full year
after the annual maintenance shutdown and the fire accident at the main
refinery unit with capacity of 80,000 bbls/day last year which made total
utilization rate in 2012 decrease to only 74,000 bbls/day. Meanwhile, GRM is
anticipated to stabilize at US$7/bbl, weakening slightly from 2012 which is
estimated at above US$8/bbl. Moreover, the company will begin to recognize
additional income from a solar power plant phase 1 with capacity of 40 MW
for a full year and phase 2 with capacity of 50 MW after it completes the
construction in 1Q13. We are likely to revise up our net profit forecast in
2013 to reflect an extraordinary item, the remaining B500m of property
damage claims. For the business interruption claims, BCP is negotiating with
the insurance company. Preliminarily, minimum claims the company will
receive is estimated at around B300m. However, under our conservative
method, we still not include this item in our forecast; we will revise our
forecast again after BCP announces its 2012’s earnings result.

Buy. More profit stability and growth foreseen in next 1-2 years
Under the current forecast, 2013’s fair value, DCF, is B39.34/share. We
reiterate to buy. Continuous profit growth is foreseen in the next 1-2 years
after recognition of income from the solar power plant which is quite certain
according to the power purchase contract. Moreover, PER in 2013 at 10x is
still lower than the regional average of 13-14x.