OR Dodges the “Cash Balance,” Morgan Stanley Emphasizes on Strong Financial Status

PTT Oil and Retail Business Public Company Limited (OR) has escaped the cash balance measure after its trading value on Thursday was kept under 15.5 billion baht, which was lower than the criteria for a cash balance measure, even though its P/E ratio was over 40x.

 

On March 18, 2021, OR closed flat at ฿33.00/share with a trading value of 4,720 million baht. The highest price of the day was ฿33.50/share and the lowest was ฿32.25/share.

 

Morgan Stanley stated in its analysis on OR, expecting the company’s revenue would double within 2023 as OR has established a solid franchise business known as Cafe Amazon with a special agreement with 7-Eleven and other restaurants that are not limited to gas stations only.

“Even though oil prices were fluctuating in the past five years, coupled with a lower demand in 2020, OR’s gross profit margin still accelerates continuously each year, reflecting a good management skill by the company’s executives,” stated Morgan Stanley.

Moreover, OR has outstanding market share, which leads to a strong operating performance. The retail market is expecting to recover, while its non-oil business such as convenient stores, cafes and restaurants is expecting to buoy OR’s profit growth even higher.

“OR’s financial status is very strong, compared to its peers in the global market, with more than USD700 million of operating cash flow, allowing short-term business expansions to be done easily,” added Morgan Stanlry.

 

As for the acceleration in share price since the ex-dividend date, a high net-worth investor, who asked not to be named, revealed to Kaohoon Turakij that the buying pressure from certain high net-worth investors that had been accumulating OR’s shares since the level of Bt30.00 per share.

After the share price began to edge higher than its usual range in the past few weeks, traders and other high net-worth investors took the opportunity for a speculative buy, causing the share price to move even higher.

 

Asia Plus Securities (ASPS) stated that the spike in OR’s share price might be due to a speculation on an upcoming non-oil business deal that has yet to be announced as the business has higher return than oil business.