The Rough Path of TASCO

A few days ago the share price of Tipco Asphalt Public Company Limited (TASCO) has risen as high as 15% in response to a skyrocket profit of 1,862 million baht in 3Q20, an increase of 161% compared to 712 million baht a year ago.

 

Despite the fact that revenue from sales and services dropped 9.20% to 8,576 million baht. A decrease in revenue was due to reduction in sales volume in particular the international market following a shift in emphasis towards retail sales rather than wholesale segment as the overall asphalt supply in the market was tight.  

 

On the other hand, the domestic sales volume has increased significantly, resulting from the effect of over 7 months prolonged delay disbursement of fiscal year 2020 government budget in the previous two quarters which caused the demand to peak at record sales volume.

 

Cost of asphalt production also dropped due to the high volatility in the global crude oil market. In addition,TASCO had a gain from the reversal of net realizable value (NRV) provision of 42 million baht attributable to an increase in market price of asphalt and petroleum products. 

 

As a result, the share price of TASCO on Monday (Nov 9) climbed more than 15%. 

 

Unfortunately, a surge in buying pressure didn’t last that long, a sell-off yesterday (Nov 10) plunged TASCO’s price by 1.60% to trade at ฿18.50/share with a total trading value of 2,254 million baht. 

 

In the middle to long term, it’s necessary to keep eyes on US sanctions on Venezuela which affect TASCO to temporarily shut down its refinery in Kemaman, Malaysia.

 

TASCO was contacted by the US State Department being asked to stop its procurement of Venezuela crude oil by the end of November 2020. Therefore, TASCO has to close its Kemaman refinery immediately as it’s specifically designed to refine heavy crude oil from Venezuela, and 90% of the refinery’s feedstock was sourced from Venezuela.  

 

Following Joe Biden defeating Donald Trump to become the new president of the United States, it widely expects that US-Venezuela tension would lessen, which would benefit TASCO‘s asphalt business as well.    

 

Even facing a rough path, TASCO still has yet to demonstrate its backup plan regarding the current situation.   

 

Or the rumor has it said that there are major investors backing up TASCO is true..Oops!