The Bangchak Petroleum

The Bangchak Petroleum Plc (BCP)

2Q14 profit is expected to fall by only 20.6%qoq despite a 46-day
planned shutdown. Profit in 2H14 is projected to come mainly from
solar power business, while profit from refinery business is
expected to stay flat. We reiterate BUY, focusing on fundamental
factors.

- 2Q14 profit to fall 20.6%qoq
We estimate 2Q14 net profit at B1.24bn, dropping 20.6%qoq. Although
BCP's capacity dropped by 50.4%qoq as a result of the planned shutdown,
2Q14 net profit would stay strong owing to the following factors: 1) Net
GRM is projected to increase by 6.1%qoq. 2) Income from all five units of
Phase 3 solar power plants has been booked, starting from late-April 2014.
Thus, profit from solar power business is expected to grow by 30.3%qoq. 3)
Profit from marketing business is expected to increase by 10.1%qoq. 4)
B500m insurance claim for property damage might be booked (not included
in our earnings forecast yet). Overall, we estimate BCP's 2H14 net profit at
B2.8bn, rising 7.5%yoy.
- Solar power business: main powerhouse in 2H14
We preliminarily maintain FY2014 earnings forecast. 1H14 net profit is
projected to make up 69% of our FY2014 earnings forecast (B500m
insurance claim not included). However, 2H14 net profit is unpredictable as
a result of extraordinary items; we are currently waiting for clarity on
events in 2H14 in order to revise FY2014 earnings forecast. Profit in 2H14 is
projected to come mainly from solar power business; production from all
three phases would be recognized. Meanwhile, profit from refinery business
would stay flat from 1H14. Though a refinery has resumed working after a
planned shutdown in 2Q14, 2H14 GRM is expected to drop from 1H14 (high
season).
- BUY. 5%p.a. dividend yield
We derive FY2014 fair value (DCF) at B36. Its profit is expected to grow
continuously and stably. We reiterate BUY for 5%p.a. dividend yield.