20180115-辉立证券-PTT_Global_Chemical_Record_core_profit_seen_for_4QFY17_11页_398kb

PTT Global Chemical Summary

Core Content

PTT Global Chemical (PTTGC) is a leading petrochemical and chemical company in Thailand, part of the PTT Group. The document provides an analysis of PTTGC's financial performance, key business segments, and investment outlook for the fiscal years 2017-2018.

Main Points

• 4QFY17 Core Profit: Expected to reach a record high of Bt11,874 million, up 19% quarter-over-quarter (Q-Q), driven by higher HDPE prices and rising oil prices.
• Refinery Business: Likely to experience a soft patch due to a drop in gasoline-Dubai crack spreads and a contraction in market GRM, despite high refinery run rates and net stock gain.
• Olefins and Derivatives Business: Expected to perform strongly with a 5% increase in utilization rate and an 8% Q-Q rise in HDPE prices.
• Aromatics Business: Expected to show a weak performance due to declining PX-condensate and BZ-condensate spreads.
• Asset Injection Project: Expected to contribute around Bt1.1 billion in profit, notably from PTTAC, due to a 40% surge in ACN margins caused by supply constraints from Tropical Storm Harvey and the restart of HMC.
• Profit Upgrades: FY17 net profit forecast raised by 4% to Bt39.8 billion, and FY18 forecast raised by 3% to Bt40.2 billion, reflecting higher utilization rates and additional mLLDPE capacity.
• Stock Recommendation: 'BUY' with a FY18 target price of Bt104/share, indicating a favorable earnings outlook and attractive valuations.

Key Information

• Market Cap. (Btmn): 417,069 as of 15 January 2018.
• Closing Price (Bt): 92.50.
• Target Price (Bt): 104.00 (+16.65%).
• Shareholder Structure:
  • PTT PCL: 48.9%
  • Thai NVDR CO LTD: 12.0%
  • Chase Nominees Limited: 2.1%
• Price Performance:
  • 1MTH: 11%
  • 3MTH: 12%
  • 1YR: 42%
• Relative to SET Index:
  • 1MTH: 5%
  • 3MTH: 7%
  • 1YR: 23%
• Financials (FYE Dec):
  • Sales (Btmn): 429,197 (FY18E)
  • Net Profit (Btmn): 40,243 (FY18E)
  • EPS (Bt): 8.93 (FY18E)
  • P/E (X): 10.4 (FY18E)
  • BVPS (Bt): 64.70 (FY18E)
  • P/B (X): 1.4 (FY18E)
  • DPS (Bt): 3.90 (FY18E)
  • Dividend Yield (%): 4.2 (FY18E)
  • ROE (%): 14.38 (FY18E)
  • Debt/Equity (X): 0.62 (FY18E)
• Valuation Method: P/B'18 at 1.6x.
• Key Financial Summary:
  • Sales: 40,243 (FY18E)
  • Net Profit: 40,243 (FY18E)
  • EPS: 8.93 (FY18E)
  • BVPS: 64.70 (FY18E)
  • GPM (%): 9.38 (FY18E)
  • NPM (%): 9.38 (FY18E)
• Peer Comparison (as of 12 January 2018):
  • PTTGC TB: P/E 10.4, P/BV 1.7, Div Yield 3.8%
  • Thai Oil PCL (TOP TB): P/E 8.8, P/BV 1.9, Div Yield 4.4%
  • IRPC PCL (IRPC TB): P/E 17.8, P/BV 1.9, Div Yield 3.1%
  • Esso Thailand PCL (ESSO TB): P/E 9.7, P/BV 3.2, Div Yield n.a.

Risk Factors

• Volatile crude oil prices
• Petroleum and petrochemical supply
• Unplanned maintenance shutdowns

Key Developments

• PTTGC board approved an investment budget of US$288.2 million for LLDPE Expansion and Comonomer plant.
• Aromatics II Debottlenecking Project in Rayong Province to increase production capacity.
• PTTGC participated in the Thai Private Sector Collective Action Coalition Against Corruption (Thai CAC) program.

Corporate Governance

• The results of the Thai Institute of Directors Association (IOD) survey are disclosed in accordance with the Office of the Securities and Exchange Commission.
• The survey results are based on third-party information and not an internal evaluation.
• PTTGC is part of the Thai CAC program, indicating commitment to anti-corruption initiatives.