PTT

Business restructure for strong growth BUY

PTT Plc

PTT has been working on business restructure, aiming for strong

growth in a long run; its core businesses would be in line with the

strategy. Net profit is projected to grow by 10.0%yoy in 2014 and

6.7%yoy in 2015. We reiterate BUY.

- Working on business restructure

According to the analyst meeting this morning, PTT has been working on

business restructure, focusing on transparency and the company's

strategies, as follows:

1) PTT will still hold 100% stake in the subsidiary after the separation of a

gas pipeline business.

2) PTT has confirmed to sell the entire shares of 27.22% in BCP to the

SET or the new joint venture.

3) PTT will list two subsidiaries, SPRC and GPSC, on the SET in 2015.

4) PTT has planned to sell its palm oil business in Indonesia; there have

been many problems, so it is not profitable to continue working on it.

- 2Q14 profit grows as expected. 2H14 profit to drop slightly

2Q14 net profit was reported at B30.4bn, growing 10.9%qoq (close to our

projection). Profit from PTTEP rose by 46.3%qoq thanks to higher price and

sales volume. Overall, 1H14 net profit was B57.9bn, rising 21.9%yoy,

making up 55.6% of FY2014 earnings forecast. We maintain our FY2014

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 a 40-day major turnaround in 3Q14 as well. 2) GRM is expected to

fall from 1H14 due to seasonal effect. Still, 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 9%

upside. Its FY2014 P/E ratio of 9x is lower than the regional average of

11.3x. Its dividend yield is expected at 4-5% p.a.