The Bangchak Petroleum

The Bangchak Petroleum Plc (BCP) 

 Massive net loss projected in 4Q14 due to stock loss   

 

We project BCP to face B2.8bn net loss in 4Q14 (versus B381m net profit in 3Q14) as a result of US$15/barrel or B3.3bn stock loss (LCM included) and B800m impairment charge from Nido. However, there have been some positive factors in 4Q14: 1) Market GRM has grown 18.9%qoq; 2) Refinery utilization rate has risen 5.1%qoq; 3) Profit from the solar power business has jumped 6.3%qoq; and 4) B200m extraordinary profit from insurance claims is expected. Overall, BCP's FY2014 net profit is estimated at B413m, plunging 91.1%yoy, but still better than our initial projection.  

 

- Profit to grow in 2015  

 

We revise up our FY2014 earnings forecast to reflect better-than-expected 4Q14 profit, but maintain our FY2015 net profit estimate at B4.4bn. In 2015, profit from all three phases of 118-MW power plant would be fully recognized. The refinery would be working at its full capacity after a 45-day shutdown in 2014. In addition, after facing a massive stock loss in 2014, BCP is likely to recognize stock gain in 2015 (not included in our forecast yet).  

 

- Downgrade to HOLD. Switch to PTTGC   

 

FY2015 fair value (DCF) is B33.50. The share price has a limited upside now. For short-term investment, we downgrade our recommendation from BUY to HOLD, switching to laggard PTTGC(FV@B68) that still has an upside.