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PTT Global Chemical PCL (SET:PTTGC), 50.18% stake owned directly and indirectly by PTT PCL (SET:PTT), is Thailand's largest petrochemical and refining company with a capacity of 280,000 barrels of crude oil and condensate per day intake, processing various high-quality petroleum products with total capacity of 228,000 barrels per day. The company has a combined production capacity of 2,259,000 tons per year producing aromatics products including benzene, paraxylene, cyclohexane, orthoxylene, toluene, and mixed
xylenes.
The business operations are divided into eight segments: refinery and shared facilities including liquid petroleum gas (LPG), diesel and crude refining unit; aromatics including benzene, paraxylene and mixed xylenes; olefins and derivatives; polymers; ethylene oxide (EO) based performance, used as components for cosmetics, feedstock for the textile industry, clear plastic containers, hygiene products, pharmaceuticals and livestock feed; green chemicals, such as fatty alcohol and methyl ester; high volume specialties, products for intermediate and downstream petrochemicals, and phenol, used in upstream products and other downstream industries, including automotive, construction, and engineering plastic.
The company said on August 10 that its second-quarter 2016 revenues were 66.38 billion baht, down 40.72% year-on-year, missing the 79.36 billion baht consensus estimate of 7 analysts, according to the Financial Times. PTTGC posted second-quarter 2016 earnings of 1.10 baht per share, down 42.29% year-on-year, missing the 1.25 baht per share consensus expectations of 7 analysts.
PTT Global Chemical blamed a 2-month scheduled shutdown of its refinery and an unplanned stoppage of its olefins cracker for the revenues and profits shortfall. The company also said in a statement that its refinery run rate dropped to 35% from 100% a year earlier, while its gross refining margin fell 25% year-on-year to $4.05 a barrel, according to Reuters.
For 2015, PTTGC reported a dividend of 2.70 baht per share, down 13.92% from 2014. The 23 analysts covering the company expect dividends of 2.68 baht per share for the upcoming fiscal year, representing a year-over-year decrease of 0.93%. The third-quarter 2016 earnings announcement is expected on November 7. Analysts are expecting earnings of 1.67 baht per share, on revenues of 110.59 billion baht.
Technically, shares of PTTGC have been moving in a descending broadening wedge chart pattern since early 2013. The stock has run up over 26% year-to-date and is now trading in the range between 55 and 65 baht per share. The SET index is undergoing a correction and PTTGC may break down if the SET correction continues.
PTT Global Chemical’s management raised concerns about Chinese exports on the company's gasoline production and spread at their Q2 2016 analyst meeting on August 16. The issue has grown even larger as China's state oil refiners are already exporting more diesel and gasoline to foreign markets due to a domestic supply glut and sluggish local uptake.
Other concerns of the management were Middle East crude prices and the global crude oil demand and supply balance. The International Energy Agency (IEA) dropped a bombshell on Tuesday and said that global oil demand growth is slowing at a faster pace than first thought. The IEA warned that it would take "a while longer" for oil markets to rebalance.
According to the Financial Times, the consensus amongst 26 polled investment analysts covering PTT Global Chemical gave the company an Outperform rating, with the median 12-month price target of 70 baht per share, as of September 9, 2016.
Disclosure: No position and no recommendation. |
