The Bangchak Petroleum

The Bangchak Petroleum Plc (BCP)

 

- Another refinery with profit from core business in 3Q15 

We estimate 3Q15 net profit at B204m or a plunge of 92.7%qoq, mainly because of a significant stock loss of US$4/barrel and Fx loss of around B350m. However, normalized profit would decline only 26.2%qoq; market GRM has dropped 21.2%qoq to US$8.2/barrel, but there is compensation from refinery utilization rate that has increased 4.3%qoq to 117,000 barrels/day, so total GRM in 3Q15 has decreased 67.2%qoq to US$3.9/barrel. Profit from the marketing business and solar business is projected to weaken 4.7%qoq and 9.1%qoq, respectively. Overall, 9M15 net profit is estimated at B4.03bn, growing 26.1% from the same period last year and making up 71% of our FY2015 forecast. 

- Profit to grow again in 4Q15 on seasonal effect 

We maintain FY2015 net profit forecast at B5.7bn, which is a significant growth from B712m in 2014. The company would be able to show a strong profit growth in 4Q15, thanks to GRM that would increase in a high season. Moreover, the power plant business would get into a high season again in 4Q. For 2016, normalized profit would only stay around B5bn on an assumption that GRM drops US$1/barrel from 2015 and there is no new investment project. However, there is still an upside from stock gain, which we have not yet included in our forecast. Plus, there is a hidden value from listing of BCP’s subsidiary, which runs a power business, in the SET in 3Q15.  

- Hold in short term for dividend yield of 4.1% p.a. 

2015 fair value (DCF) is B35.50; we will use 2016 fair value of B41.50 after 3Q15 earnings declaration. For now, we reiterate to hold BCP for dividend yield of 4.1% p.a. (paying semiannually).