Date of Report

25 October 2024

Broker Name

UOB Kay Hian

Company Overview

PTT Global Chemical (PTTGC) is a fully integrated petrochemical and chemical company based in Thailand. The company’s main products are olefins, specifically ethylene and propylene.

Stock Data

• Share Price: Bt24.90
• Target Price: Bt24.50
• Market Cap: Bt113,848.4 million (US$3,398.1 million)
• Shares Issued: 4,508.8 million
• GICS Sector: Materials
• Bloomberg Ticker: PTTGC TB
• 3-Month Average Daily Turnover: US$18.4 million
• 52-Week High/Low: Bt41.25 / Bt22.80

Price Performance

• 1 Month: -9.8%
• 3 Months: -8.2%
• 6 Months: -34.8%
• 1 Year: -24.1%
• Year to Date (YTD): -34.4%

Major Shareholders

• PTT: 45.2%
• NDVR: 4.8%
• Siam Management Holding: 3.0%

Earnings Overview

Expected Net Loss for Q3 2024

• Anticipated net loss of Bt10.2 billion, a decrease compared to previous quarters due to:
  • A Bt9.0 billion impairment loss from Vencorex
  • A stock loss of Bt3.6 billion, driven by a US$9.0/bbl decline in crude oil prices from June to September
  • Weaker olefins performance, impacted by declining petrochemical spreads

Core Operational Loss

• Core operations are expected to show a loss of Bt1.2 billion, an improvement from the previous quarter due to:
  • Stronger performance in the upstream business
  • Aromatics spreads rose by 5% quarter-on-quarter
  • Market gross refinery margin (GRM) remained steady at US$3.2/bbl

Financial Projections

3Q24 Results Preview

• Revenue: Bt155.5 billion (down 4% year-on-year, down 8% quarter-on-quarter)
• COGS: Bt148.1 billion (down 1% year-on-year, down 6% quarter-on-quarter)
• EBITDA: Bt5.9 billion (down 46% year-on-year, down 35% quarter-on-quarter)
• Core Profit: Expected to be a loss of Bt1.2 billion
• Net Profit: Expected to be a loss of Bt10.2 billion

Future Outlook

• 4Q24 Net Loss: Expected to remain flat quarter-on-quarter with another impairment loss of approximately Bt10 billion from PTT Asahi Chemical (PTTAC).
• Market Conditions: Facing intensified competition and oversupply in the market, leading to a drop in prices for key products such as acrylonitrile and methyl methacrylate.
• Petrochemical Sector: The outlook for petrochemical spreads is negative, with a decline in aromatics and olefins spreads noted.

Analyst Recommendation

• Rating: Maintain HOLD
• Target Price Adjustment: Increased to Bt24.50 for 2025, based on 0.41x 2025F P/B at -2SD.
• Switch Recommendations: Analysts suggest switching to Bangchak Corporation (BCP) and Indorama Ventures (IVL) as leading stocks within the oil & gas sector.

Environmental, Social, and Governance (ESG) Initiatives

• CG Report: 5
• SET ESG Rating: AAA
• Environmental Goals: PTTGC is committed to achieving net-zero greenhouse gas emissions by 2050 through efficient resource use and cooperation with partners.
• Social Contributions: The company focuses on creating value for society and supporting community welfare and education.
• Governance: Emphasis on transparency and innovative, environmentally friendly chemical production.