IRPC Unveils 5-Year Plan with ฿50Bn Budget, Analyst Recomm. “BUY” with TP of ฿4.50

IRPC gave a green light to the 5-year external fundraising plan (2021-2025) to be used for investment and/or working capital in Baht or USD currency equivalent to 50,000 million baht. The analyst recommended “BUY” with a target price of ฿4.50/share in anticipation of a bright prospect in 1Q21 as petrochemical spreads remain strong.

 

Mr. Chawalit Tippawanich, President and Chief Executive Officer of IRPC Public Company Limited (IRPC), revealed that the shareholders meeting on March 31, 2021 has approved the 5-year external fundraising plan (2021-2025) to be used for investment, and/or refinancing, and/or working capital. The fundraising can be in the form of loans from financial institutions, and/or debentures, and/or other securities from domestic and/or international sources in Baht or USD currency equivalent to 50,000 million Baht over the five years period.   

 

Also, he stated that the company has set the capital expenditure budget of 36,251 million for the 5-year investment plan (2021-2025) that will be used to support 7 development projects – Strengthen IRPC project, Reliability Improvement project, Ultra Clean Fuel (UCF) project, Infrastructure and Asset project, NOAH cost saving project, Specialty Product project, and M&A under Galaxy project.

 

For the year 2021, IRPC believes the New Normal and the ongoing trade war will bring benefits to the company as manufacturers and investors would pull production out of China and move to Asian countries instead.

 

Maybank Kim Eng (Maybank) maintained a “BUY” recommendation on IRPC with a target price of ฿4.50/share due to a potential value play and could see it outperform when market rotates back into the energy sector.      

 

IRPC is trading at 1x FY21 P/B, which lags the rest of the peers while the positive thesis on resilient demand and tight supply for PP and ABS is intact and will persist into 2Q21 as plant turnarounds for the region. 

 

GRM recovery is expected to continue, albeit gradually. Maybank expected 1Q21 will be a blockbuster quarter as IRPC will see a windfall from stock gain (USD15/bbl increase in crude) while strong chemical spreads should push its GIM to USD12-13/bbl.