The Bangchak Petroleum
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Solar power plant: powerhouse in 2H14
The Bangchak Petroleum Plc (BCP)
2Q14 net profit dropped by 19.4%qoq. Profit in 2H14 is projected to
come mainly from solar power business, while profit from refinery
business would stay flat due to seasonal effect. We reiterate to buy,
focusing on strong business base.
- 2Q14 profit drops as expected
2Q14 net profit was reported at B1.26bn, dropping 19.4%qoq (close to our
projection). Despite a 46-day planned shutdown of a refinery, BCP benefited
from the following contribution: 1) Net GRM rose by 10.6%qoq. 2) Income
from all five units of Phase 3 solar power plants totaling 48 megawatts was
booked, starting from late-April 2014. 3) Profit from marketing business
increased by 10%qoq owing to higher marketing margin. 4) B521m
insurance claim for property damage was booked (not included in our
earnings forecast yet). Overall, BCP's 1H14 net profit was B2.82bn, rising
8.2%yoy.
- Solar power plant: powerhouse in 2H14
We preliminarily maintain FY2014 earnings forecast. 1H14 net profit made
up 70% 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 fully recognized. Meanwhile, profit from refinery business would
stay flat from 1H14. Though a refinery has resumed working after a
shutdown, 2H14 GRM is expected to drop from 1H14 (high season).
- BUY. 5%p.a. dividend yield
We derive FY2014 fair value (DCF) at B36. We reiterate BUY; its profit is
expected to grow continuously and stably, and average dividend yield can
be expected at 5%p.a
