PTT

PTT Plc

- 2Q14 profit to grow 6.3%qoq, mainly from PTTEP
We estimate 2Q14 net profit at B29bn, growing 6.3%qoq thanks to the
following factors: 1) Profit from PTTEP is projected to rise by 46.3%qoq
thanks to higher price and sales volume. 2) Profit from pipeline business is
expected to grow. Sales volume from gas separation business would climb
by 3.3%qoq after GSP#5 has resumed working at its 100% capacity. Also,
sales volume to EGAT is projected to rise by 6.0%qoq thanks to high
season. Overall, 1H14 net profit is estimated at B56bn, rising 17.8%yoy,
making up 54.4% of FY2014 earnings forecast.
- 2H14 normalized profit to drop slightly
We maintain our FY2014-2015 earnings forecast. 2H14 normalized profit is
projected to drop slightly from 1H14 due to the following factors: 1) GSP#5
and GSP#6 will undergo 25-day and 17-day maintenance shutdown in
3Q14. TOP's factories will undergo 40-day major turnaround in 3Q14 as
well. 2) GRM is expected to fall from 1H14 due to seasonal effect. Regional
refineries will resume working at 100% capacity after undergoing
maintenance shutdown in 2Q14, and China's diesel export would be high
because of its sluggish economy, so supply of finished oil is expected to
increase. Overall, FY2014 net profit is estimated to grow by 10%yoy.
- Low P/E ratio. Strong fundamental factors in long run
We derive FY2014 fair value (DCF) at B360. We reiterate BUY for 18%
upside. Its FY2014 P/E ratio of 8.7x is lower than the regional average of
11.5x. Its dividend yield is expected at 4-5%p.a.