PTT

Time of important changes BUY

PTT Plc

- 3Q14 profit drops 19.3%qoq, slightly better than expected

PTT posted 3Q14 net profit at B24.5bn, decreasing 19.3%qoq, slightly

better than projected. The decreasing profit resulted mainly from lower net

profit of PTTEP in 3Q14, decreasing 16%qoq to B15.3bn, and declining

earnings from the refinery business (TOP, PTTGC, IRPC, SPRC, and BCP) as

a result of stock loss. Overall, 9M14 net profit was B82bn, rising 5.3%yoy

and representing 83% of FY2014 forecast.

- 2015 earnings to be boosted by sales and energy price restructuring

We maintain FY2014-2015 earnings forecast, under an assumption for

Dubai crude oil price of US$100/barrel in 2014 and US$90/barrel in 2015.

Although Dubai crude oil price is estimated to lower in 2015, the profit

would still be able to grow continuously by 5.1%yoy in the year. In the

short term, profit in 4Q14 is projected to weaken from 3Q14 as a result of

decreasing average petroleum selling price as a reflection of around 10%

decrease in global crude oil price from end-3Q14. However, profit growth of

4.6%yoy is still foreseen in FY2014.

- Buy on weakness

We switch to use 2015 fair value (DCF) of B405. Buying on weakness is

recommended. In the past one month the share price has risen until there is

only 6% upside left, but dividend yield can be expected at around 4% p.a.

and there is also an additional upside from the restructuring of NGV selling

price and ex-gas separation plant LPG price.