PTT Global Chemical

PTT Global Chemical Plc (PTTGC)

Profit beats. 4Q12 profit was Bt8.9bn (+156% YoY but -19.5% QoQQoQ), ahead of estimates
on a better product spread than expected, mainly aromatics. The fall QoQ arose out of
a small stock loss in 4Q12 after a stock gain in 3Q12, on lower oil prices. Excluding stock
gain/loss, operating profit widened 10% QoQ on higher product-to-feed (P2F) margin.
Full-year net profit was 7% above forecast at Bt34bn (+13.2% YoY). We BUY with TP of
Bt90/share on improving earnings outlook, with possible upside to our 2013F.
Highlights:
Market GRM edged down to US$4.7/bbl in 2012 from US$4.9/bbl in 2011 on lower
crack spread for middle distillates, accounting for 65% of its refined products. It
also booked stock and hedging gains of only US$0.1/bbl vs. US$1.8/bbl in 2011. In
all, accounting GRM fell to a gain of US$4.8/bbl in 2012 from US$6.7/bbl in 2011. It
continued to maximize the crude run of its refinery with a utilization rate of 100%.
Aromatics utilization slid to 86% in 2012 from 88% in 2011 from more maintenance
shutdowns and change in feedstock source: it was cheaper but gave lower product
yield. This was offset by a rise of 42% YoY in market P2F to US$257/t on a strong
benzene margin (+63% YoY), but lower PX price cut paraxylene margin by 13% YoY.
Olefins operating margin edged down YoY with adjusted EBITDA margin of 27%,
down from 28% in 2011 despite the gas price adjustment, on a lower LDPE spread -
while other PE products showed a slight improvement YoY. 2012 utilization rate
was 88%, higher than 2011’s 80% upon higher gas flow from PTT and shorter
maintenance shutdown. PE utilization rose to 96% in 2012 from 80% in 2011 due to
fewer shutdowns of its olefins crackers. Only HDPE saw a decline in utilization due
to more days of maintenance shutdown compared with 2011.