Analyst Recomm. “BUY” on IVL at TP of ฿44 over Strong Earnings Prospects in 1H21

The share price of IVL yesterday spiked nearly 8% on speculation, the analyst expected strong earnings in 1H21, underpinned by an improving PET spreads and a high season for business. Meanwhile projecting a 4Q20 result to make a turn around to a net profit of 1,517 million baht, along with a full-year earnings of 2,621 million baht, mainly driven by inventory gain, hence recommending “BUY” with a target price of ฿44.00/share.

 

Bualuang Securities (BLS) expected the share price of Indorama Ventures Public Company Limited (IVL) to continue to grow over the strong earnings in 1H21 forecast, due to demand recovery and seasonality. In the short-term outlook, BLS projected a 4Q20 earnings to increase significantly compared to both YoY and QoQ from a large inventory gain, maintaining its “BUY” recommendation with a target price of ฿44.00/share.       

 

4Q20 is expected to rebound from a loss of 1,516 million baht in 4Q19 to a profit of 1,517 million baht, an increase of 299% QoQ, as the result of 1) a higher sales volume for integrated oxide & derivative (IOD) business and 2) a robust demand for fibers business. However, BLS estimated a 2020 earnings of 2,621 million baht, a decrease of 50% YoY.

 

For the 1Q21, BLS saw a continued profit growth as this quarter is a high season for business, the PET spreads will increase both YoY and QoQ. Global economic recovery and a mega-rollout of coronavirus vaccine, together with Covid-19 relief and stimulus package in many countries will boost a demand for lifestyle fibers, mobility fibers and MTBE , therefore BLS expected the net profit of IVL in 1Q21 will expand compared to a year earlier.