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PTT PCL (SET:PTT), 51.1% stake owned by the Ministry of Finance as of March 8, 2016, 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 November 11 that its third-quarter 2016 revenues were 435.17 billion baht, down 13.84% year-on-year, missing the 457.90 billion baht consensus estimate of 3 analysts, according to the Financial Times. PTT cited the decrease in average selling prices of petroleum and petrochemical products of both Aromatics and Olefins, following falling crude oil prices.
PTT posted third-quarter 2016 earnings of 9.46 baht per share, up 10.28% from the same period a year ago, exceeding the 8.43 baht per share consensus estimate of 4 analysts. The company said in a statement the gradual decline in feed gas costs, in line with falling crude prices, helped boost core earnings in the natural gas business and reduced 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 12.51 baht a share for the upcoming fiscal year, an increase of 25.12%. The next earnings announcement from PTT is expected on February 17.
PTT said on November 18 the company will spin off its oil marketing and retail business and plans to list the division on Thailand's stock exchange. The retail division, to be renamed PTT Oil and Retail Business Co Ltd (PTTOR), may be valued between $2 billion and $3 billion, according to Reuters. PTT has more than 1,400 service stations, representing 40% of Thailand's gas station market, and contributes to about 15% of its operating profit. In June, the company said it hired JPMorgan Chase & Co and Phatra Securities to advise them on a potential IPO of its retail business in 2017.
Technically, shares of PTT are trading in a symmetrical triangle chart pattern with the near-term head resistance at about the 360 baht and 370 baht levels. The stock could pull back to between the 317 and 320 baht levels, if PTT fails to break out. Keep in mind that the stock is trading along with crude oil prices, so the upside potential could be limited if the global supply glut persists.
According to the Financial Times, the consensus amongst 26 polled investment analysts covering PTT gave the company an Outperform rating, with the median 12-month price target of 380 baht a share, as of November 26, 2016.
Disclosure: No position and no recommendation. |
