Analysts See Positive Outlook on PTT’s Life Science Business, Giving a TP as High as Bt54

Analysts have a positive outlook on PTT’s new S-Curve strategy in expanding into the life science area, seeing high growth potential toward the business and giving a target price as high as Bt54 per share.

 

On April 16, 2021, PTT Public Company Limited (PTT) announced that PTT’s Board of Directors at the meeting on September 17, 2020 and Board of Directorsof Lotus Pharmaceutical Company Limited (Lotus”, the Taiwan listed company on TWSE) on April 16, 2021, approved the investment in Lotus’ newly issued shares via private placement by Innobic LL Holding Co., Ltd., which is a wholly owned subsidiary of Innobic (Asia) Co., Ltd. (a subsidiary of PTT), in an amount of 17,517,348 common shares at NT$80.7 per share.

 

The subscription price complied with Taiwan’s private placement regulation and the total investment is approximately USD 50 million. After the aforementioned subscription of Lotus’ newly issued shares, Innobic LL Holding Co., Ltd., has a stakeholding in Lotus at 6.66% of the total registered and paid-up capital.

The objective for the investment is to align with PTT’s New S-curve strategy in expanding into new business especially in the Life Science area. Lotus is a fully integrated pharmaceutical company that focuses on research and development, manufacturing, and distribution of Generic drugs that cover the rapeutic areas especially oncology and central nervous system. This investment will enable PTT to expand into addressable markets of oncology portfolio as well as increase ASEAN patient’s accessibility to Generics Drugs.

 

KGI Securities has given an “Outperform” rating on PTT Public Company Limited (PTT) with a target price at ฿54.00/share.

KGI stated that the size of the pharma market in Thailand in 2018 was US$5.5bn with 104year CAGR of 5%, implying US$9.2bn in 2028. PTT sees an opportunity to enhance life science business in Thailand as the country sees an aging society, increasing health awareness, rising healthcare cost, pollution, and infectious diseases.

The company will be going for a new S curve life science business with an investment budget of about 10% of its total CAPEX over the next ten years and will invest via Innobic (Asia) Co., Ltd., which is its wholly owned subsidiary.

KGI maintained a rating of Outperform on PTT with a 2022 target price of Bt54.00, based on SoTP methodology.

 

SCB Securities (SCBS) also has a positive view on PTT toward the life science business as well, giving an “Outperform” rating with a target price at ฿47.00/share.

SCBS maintained a positive outlook on PTT’s business, buoyed by strong oil prices and petrochemical products in 2Q21 and 2H21. More importantly, SCBS saw that the investment in life science business might result in higher risk in investment, but the business has high potential growth. Meanwhile, SCBS believed PTT has good risk management skills in the new business, which is similar to the E&P business that proved PTT’s ability in managing the fluctuation in oil and gas business, and the ability to adjust to the changing business environment.

The share price of PTT underperformed SET Index slightly and moved narrowly in the past month. SCBS believed the market was overconcerned on PTT’s new business and cautious on the oil prices.

In addition, SCBS reiterated “Outperform” rating on PTT with a target price at ฿47.00/share.