IRPC

The waiting is ending BUY

IRPC Plc

- Net profit expected in 3Q14 from extraordinary income

We estimate 3Q14 net profit at B24m or a plunge of 86.3%qoq. The net profit

would result entirely from extraordinary items, which are insurance claims for

property damage from the fire accident, refund of the remaining prepaid

rental fee after the company has terminated a lease agreement for TPI Tower

building, gain from selling of shares in United Grain Industries Co., Ltd. to

Liaopairattana Co., Ltd., and a tax credit from amortization of bad debt. In

terms of normalized earnings, however, the company is projected to face loss

of B2.4bn, mainly because of stock loss. Overall, 9M14 profit is projected at

B546m, increasing from B42m in the same period last year and representing

41% of our FY2014 forecast.

- Cut 2014-2015 profit forecast

We revise down our profit forecast for FY2014-2015, as shown in the table,

mainly to reflect a significant decrease of 22% of Dubai crude oil price from

end-2Q14 to US$85/barrel at present. The lower oil price would adversely

affect both the refinery and petrochemical businesses. FY2014 forecast is

slashed to reflect stock loss and non-recurring items. For FY2015 forecast,

spreads of petrochemical products, both aromatics and olefins, have been

decreased by US$50/ton as the weak oil price has depressed the product price

and spread. Under the new forecast, the profit would decrease 25.0%yoy in

2014 but grow more than threefold from the prior year in 2015.

- Buy for long term

Under the new forecast, fair value is B3.65 in 2014 and B4.08 in 2015. We

reiterate BUY. The share price likely has already declined to reflect negative

factors, while in the long run the company still has potential to show strong

profit growth from its investment plan, especially after Phoenix project is

complete in 4Q15 since it will help upgrade IRPC’s profit to a stronger and

steadier status.