Analyst Expects PTTGC to Book a 4Q20 Profit of ฿6.5Bn, Giving “BUY” Rating at ฿71

The analyst expected PTTGC’s 4Q20 earnings to reach 6,576 million baht, an increase of 1,659% YoY due to higher GPM in the petrochemical business and higher GRM. A jump of 4Q20 earnings will result in the company to book a net profit of 371 million baht, rebounding from a net loss of 4.5 billion baht for its 9M20 financial statement. 

 

Asia Wealth Securities (AWS) believes PTT Global Chemical Public Company Limited (PTTGC) to record a 4Q20 profit of 6,576 million baht, a significant growth of 624% QoQ and 1,659% YoY and expects the total revenue for the quarter to stand at 98,363 million baht, an increase of 27.5% QoQ and 14.7% YoY.

 

The outstanding growth in earnings is expected to be driven by prices and spreads of Olefins and Polymers increase, particularly the average price of HDPE that improved 19% YoY to US$1,000/ton and the spread up 96% YoY to US$589/ton.

 

The increment of the refinery’s market GRM would result in PTTGC’s average GRM at US$1.7/bbl compared to the US$1.22/bbl quarter earlier. Also, Aromatics products spread has risen, in particular Benzene product price.

 

Furthermore, PTTGC is expected to record a Foreign Exchange gain of at least 925 million baht due to Thai Baht appreciation, as well as a stock gain net NRV of approx. 900 million baht as the crude price rose in 4Q20.

 

AWS projects PTTGC’s 2020 net profit at 371 million baht, a 97% decrease YoY, revising from the loss forecast of 4,500 million baht, due to crude price recovery as well as a faster rebound of GPM in the petrochemical business. AWS also updates PTTGC’s 2021 net profit on positive view toward crude price and GPM in the petrochemical business.

 

AWS reiterates a “BUY” recommendation on PTTGC with an updated target price of ฿71.00/share despite the share has gained more than 49% in 3 months, AWS still remains positive on business recovery.