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PTT Pcl (SET:PTT), 51.1% stake owned by the Ministry of Finance, is Thailand’s largest fully integrated gas and oil company and the eighth largest energy company in the Asia/Pacific rim region, according to Platts. The company operates three business sectors including upstream petroleum and natural gas, downstream petroleum, and coal. It procures, transmits and distributes natural gas through subsea natural gas pipelines in the Gulf of Thailand and a network of liquefied petroleum gas (LPG) terminals.
PTT is also involved in electricity generation, petrochemical products, oil and gas exploration and production, and petrol retailing businesses through its affiliated companies, including PTT Exploration and Production, PTT Utility Co. Ltd., PTT Global Chemical, PTT Retail Management Co, PTT Asia Pacific Mining and PTT Green Energy.
The company said on May 12 that its first-quarter 2016 revenues were 386.94 billion baht, down 24.95% year-on-year, missing the 416.46 billion baht consensus estimate of 6 analysts, according to the Financial Times. The company cited a drop in selling prices following weaker crude oil prices, while profit contributions from its refinery and petrochemical units dropped 54%.
PTT posted first-quarter 2016 earnings of 8.23 baht per share, exceeding the 7.35 baht per share consensus estimate of 7 analysts. PTT said the decline in feed gas costs, which dropped more than those in selling prices, helped boost core earnings in the natural gas business and reduce losses from its natural gas for vehicles (NGV) business.
According to the Financial Times, PTT reported a dividend of 10.00 baht a share in 2015, which represents a 9.09% decrease from 2014. The 22 analysts covering the company expect dividends to increase to 11.83 baht a share for the upcoming fiscal year, an increase of 18.25%. The next earnings announcement from PTT is expected on August 15.
In June, PTT told Reuters that the company is in talks with three to four hotel chain operators about plans to build 50 budget hotels at its oil service stations over the next five years in a bid to boost revenue from its retail business. The investment will be excluded from a plan to invest 25 billion baht ($709.82 million) in its oil business during 2016-2020, said the company.
Separately, PTT has hired JPMorgan Chase & Co and Phatra Securities to advise them on a potential IPO of its retail business in 2017, said Reuters. PTT is trying to find ways to fund its capital spending by spinning off its retail division, which may be valued at between $2 billion and $3 billion.
Technically, shares of PTT bounced off the lower trendline support of the downtrend channel chart pattern at 197 baht per share, or the 6-year low, along with crude oil prices. The stock has decoupled from crude prices and is now trading at 337 baht per share, up over 70% from its February low. PTT is about to break out the descending wedge chart pattern and may be heading to retest the 370 baht level. Investors may want to remain cautious on the energy sector, as the IEA warned this month that oil demand is ebbing while supply remains at “elevated levels”.
According to the Financial Times, the consensus amongst 25 polled investment analysts covering PTT gave the company an OUTPERFORM rating, with the median 12-month price target of 315 baht a share, as of July 15, 2016.
Disclosure: No position and no recommendation. |
