PTT Global Chemical

PTT Global Chemical Plc (PTTGC) 

 

- Expanding investments to increase growth

There was nothing new from the analyst meeting last Friday. PTTGC is still focusing on two major projects to add growth in the future, which are 1) investment in an ethane cracker with ethylene production capacity of 1 million tons a year in Ohio, the US, which will start a construction in 3Q16 and commence a commercial run in 4Q20, and 2) a joint venture with Pertamina in a naphtha cracker with a production capacity of 1.5 million tons a year in Indonesia, which will start a construction in 2Q17 and commence a commercial run in 2022. In addition, the company will increasingly develop green projects in order to become a center of a bio business with oil palm and sugar cane as raw materials in the future; PTTGC has previously invested in some of these businesses, e.g. Oleochemical and PLA, but has not yet generated significant profit.

- Olefins is hero in 2015

We maintain our FY2015 forecast, projecting the profit to gradually rebound in the rest of the year. The olefins business will be playing an important role in boosting PTTGC’s profit, particularly in 2H15 after the refinery business enters a low season while GRM may also weaken as a result of increasing supply globally. Similarly, a projected growth of aromatics supply in 2H15 may depress overall aromatics spreads. In conclusion, FY2015 profit is anticipated to show as much as 97.8%yoy growth.

- Lowest P/E ratio among peers. BUY reiterated

2015 fair value is B67.50. We reiterate BUY; its current P/E ratio is only 9.5x, which is lower than the regional average; dividend yield can be expected at 5.4% p.a.