Date of Report: 24 October 2024
Broker: UOB Kay Hian

Company Overview

Indorama Ventures (IVL TB) is one of the world’s largest polyester chain manufacturers, boasting a total production capacity of 17 million tonnes.

Stock Data

• Share Price: Bt25.00
• Target Price: Bt32.00 (previously Bt22.50)
• Market Cap:
  • Bt108,360.9 million
  • US$3,042.0 million
• Shares Issued: 5,614.6 million
• Average Daily Turnover (3-month): US$12.4 million
• 52-week High/Low: Bt33.75 / Bt17.90

Major Shareholders

• Lohia Family: 66.0%
• Bangkok Bank: 4.8%

Financial Performance

3Q24 Results Preview

• Expected Reporting Date: 11 November 2024
• Forecasted Core Profit: Bt2.4 billion, indicating a 98% quarter-on-quarter increase and a reversal from a loss of Bt299 million in 3Q23.
• Net Profit Projection: Bt1.1 billion, up 488% year-on-year from a loss of Bt23.0 billion in 2Q24.
• Cost Savings Contribution: Bt600 million due to asset optimization.

Production and Profit Forecasts

• Expected Revenue for 3Q24: Bt148.5 billion, up 7% year-on-year.
• Core EBITDA: Expected to be Bt13.4 billion, a 25% increase year-on-year.
• Inventory Losses: Projected at Bt1.34 billion.

Strategic Outlook

• 4Q24 Earnings: Expected to remain flat at Bt2.4 billion due to low seasonal demand but could be offset by cost savings from asset optimization.
• Growth Projections for 2025:
  • Anticipated production volume growth of 3% year-on-year.
  • Projected cost savings of approximately US$150 million due to ongoing asset optimization measures.

Spin-off Plans

• Business Spin-off: IVL plans to spin off and list two divisions:
  • Downstream IOD business (Indovinya), focusing on surfactants and coatings.
  • Packaging business.
• Objective: To unlock shareholder value and improve financial ratios, aiming for execution by 2026.

Key Financials

Financial Forecasts

Market Impact

• Earnings Forecasts: The market is expected to revise earnings forecasts upward following the announcement of 3Q24 results.
• Potential Earnings Upside: Anticipated upside of around 30% from current Bloomberg consensus forecast for 2025.

Environmental, Social, Governance (ESG)

• Environmental Commitment: IVL aims to reduce greenhouse gas emissions by 10% in 2025.
• Social Initiatives: Conducting 65 initiatives for recycling awareness and education.
• Governance Rating: Received an “Excellent – 5 Star” CG score from the Thai Institute of Directors for nine consecutive years.