IVL Share Up 3%, Analyst Forecasts Brighter Outlook in 2H21

The share price of Indorama Ventures Public Company Limited (IVL) rose ฿1.25/share or 3.12% to ฿41.25/share as of 16:11 local time in Thailand, with a trading value of 1,189 million baht.

KTBST Securities (KTBST) holds a “BUY” rating on IVL but raises a target price to 60.00 baht (up from 55.00 baht), pegged at 2021E EV/EBITDA at 9.4x, which implies -0.5 SD below its 5-yr average, maintaining a positive view over the 2H21E outlook as IVL is expected to benefit from higher production because Lake Charles Gas Cracker (IVOL) is scheduled to restart in 2H21E, upgrading the 2021E/2022E net profit forecast by 45%/33% to reflect the higher production and stronger profitability. .  

IVL’s stock price declined 16% over the past three months, underperforming the SET Index by 14%, due to concern over capital increase given the potential acquisition of Oxiteno. Although such uncertainty remains an overhang, KTBST expects IVL to become an outperformer in the medium to long terms as 1) the company has a strong financial position and thus it believes several options are on the table besides capital increase; 2) its 2H21E earnings should benefit from IVOL’s operation resumption and growing plastic demand along with an extended coverage of COVID-19 vaccination, and 3) the stock’s valuation remains attractive, trading at EV/EBITDA of 8.0x, which implies -1.25 SD below its 5-yr average.