PTT

PTT Plc
- 1Q14 profit rebounds as projected
PTT posted 1Q14 net profit at B27.4bn, growing 78.3%qoq, as projected.
Profit from PTTEP increased 67.4%qoq because a Fx loss decreased
significantly. Profit from PTT’s gas separation business rose as a result of
rising product price and decreasing cost of product sold, making the overall
spread widen 5.1%qoq on average, whereas the sales volume increased only
slightly. A Fx gain of B2.7bn was recognized, versus a Fx loss in the prior
quarter. On the other hand, shared profit from subsidiaries dropped 9.9%qoq
as a result of lower earnings of petrochemical business, particularly
aromatics, and a planned shutdown of the olefins plant I-1 and an unplanned
shutdown of the aromatics plant I4-1. Overall, 1Q14 net profit accounted for
26.4% of FY2014 forecast.
- Normalized profit to stay high in 2Q14, thanks to PTTEP
We maintain our profit forecast for 2014-2015. 2Q14 normalized profit is
projected to stay high close to the previous quarter since PTTEP’s sales
volume would increase after the acquisition of two projects from Hess
Corporation Thailand on April 22, 2014. The two projects are 1) Sinphuhorm
(Hess holding 35% stake) with 100 million cubic feet a day capacity of
natural gas production and 2) Pailin (Hess holding 15% stake) with 360
million cubic feet a day capacity of natural gas production, which would help
increase total sales volume of PTTEP by 10,000 barrels a day. For PTTGC, the
profit is projected to rebound again after all plants resume their full-capacity
operation. The refinery business would weaken because TOP and BCP will
have a planned overhaul of their refineries in 2Q14, while PTT’s gas sales
volume would decrease from eight-day and 15-day maintenance shutdowns
of the gas separation plant unit 6 (GSP#6) and the ethane separation plant,
respectively.
- Low P/E ratio and laggard price
2014 fair value (DCF and sum of parts) is B360. We reiterate to buy PTT as it
still provides 17% upside and 2014 P/E ratio is low at only 8.5x, versus the
regional average of 11x. Dividend yield can be expected at 4-5% p.a.