PTT Global Chemical

PTT Global Chemical Plc (PTTGC) 

 

- 3Q15 profit to plummet from stock loss, Fx loss  

We estimate 3Q15 net profit at B1.36bn, which is a plunge of 84.8%qoq as a result of B2.5bn in stock loss from the refinery business and NRV of the aromatics business and B2.2bn in stock loss. Yet, the company would still be able to show normalized profit of B6.1bn, or a decrease of 26.9%qoq mainly because of the refinery and aromatics businesses. Market GRM is projected to weaken 30.1%qoq and market to feed margin of the aromatics business would drop 16.6%qoq. Moreover, due to shutdowns of two aromatics plants of PTTGC in 3Q15, the utilization rate has decreased to 57%. Only the olefins business could show a significant growth in this quarter, thanks to increasing utilization rate of olefins and polymer plants and only 4%qoq decreasing EBITDA margin to 24%. Overall, 9M15 net profit is estimated at B16bn, down 20.1% from the same period last year and making up 60.1% of our full-year forecast. 

- Strong profit growth expected in 4Q15  

We maintain FY2015 earnings forecast, projecting 4Q15 profit to grow strongly again because there will not be high stock loss and Fx loss like in 3Q15. Plus, the fourth quarter is usually winter, which is a high season of the refinery business, and the petrochemical business would also benefit from year-end petrochemical restocking by producers for New Year and Chinese New Year production. Accordingly, PTTGC would be able to show a good profit growth of 

97.8%yoy in 2015 and 18.4%yoy in 2016. 

- Hold for dividend yield of over 5% p.a.  

2015 fair value is B67.50; we will switch to 2016 fair value of B74 after 3Q15 earnings report. For now, we recommend holding PTTGC for a dividend yield of over 5.1% p.a. in 2015.