Analyst Expects IRPC’s Earnings to See Profit as GRM to Increase and No Overhaul Needed

KTB Securities (Thailand) (KTBST) has reiterated the “BUY” rating on IRPC Public Company Limited (IRPC) after a report of 3Q19 net loss of Bt1.32bn due to massive stock loss of Bt1.32 and an 18-day overhaul, which ate up an improved GIM QoQ.

KTBST revised down its 2019E/20E net profit forecast by 84%/24% to Bt1.1bn/Bt6.09bn, as KTBST adjusts down GRM assumptions to USD3/USD4 per barrel from USD4.5/USD5 to reflect an increased crude premium.

In 4Q19E, KTBST expects earnings to return to profit in a lack of overhaul, improving GRM and a relatively higher margin from low-sulfur fuel oil compared to high-sulfur fuel oil of USD20-30 per barrel.

In this regard, KTBST cut its target price to Bt4.00 from Bt5.15 but keep EV/EBITDA multiple at 8.5x, which is 10-yr average level.