Outperform (17E TP Bt375.00) Company Update
PTT Outperform (17E TP Bt375.00)
Company Update
Close Bt346.00
Energy & Utilities November 1, 2016
Earnings upgrade/ Earnings downgrade / Overview unchanged
Gas business behind the solid earnings Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
29.905
32.731
KT ZMICO vs. consensus Share data
11.2%
8.7%
Reuters / Bloomberg
PTT.BK/PTT TB
Paid‐up Shares (m)
2,856.30
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
988.00/28,237.00
Foreign limit / actual (%)
30.00/15.92
52 week High / Low (Bt)
363.00/197.00
Avg. daily T/O (shares 000) NVDR (%)
6,985.00 6.60
Estimated free float (%)
48.87
Beta
1.56
URL
www.pttplc.com
CGR
Anti‐corruption
Level 4 (Certified)
Patcharin Karsemarnuntana Analyst, no 17834 [email protected] 66 (0) 2695‐5837
ST and LT catalysts We expect PTT’s 2016‐18E earnings to be solid with the contribution of the gas business still the growth catalyst for the years ahead. Moreover, the company’s long‐term growth looks promising with the country remaining dependent on gas as the major fuel; meanwhile, the targeted spinoff of its oil business and the upcoming 21st petroleum bidding with PTTEP’s involvement will be price catalysts in 2017E. The stock is currently trading at 0.09x 2017E PBV/ROE, making it more appealing than PTTEP at 0.12x 2017E PBV/ROE. Thus, we maintain an “Outperform” rating with the 2017E SOTP‐ based TP raised slightly to Bt375. Expect solid 3Q16E NP of Bt25.4bn with GSP and oil marketing as main support We expect PTT to deliver solid NP of Bt25.4bn in 3Q16E, reversing from a huge net loss in 3Q15 (due to huge Bt51bn impairment charges) but flat QoQ, with the improving performance at its GSP and oil marketing as the main support, against the mixed performance of its subsidiary/affiliates on a QoQ basis (with a higher contribution from PTTEP and PTTGC but a lower contribution from TOP and IRPC), along with forex gain in the quarter. PTT’s performance itself should be well supported by the improving performance at the GSP business (driven by larger volume to 1.72mn tons in 3Q16E, +17% QoQ given no plant turnaround, and widening product spreads on lower feed cost) and the oil marketing business (following sustained high sales volume and margin QoQ at 6,620mn litres and Bt1.3/litre, respectively, in 3Q16E), more than offsetting the weakening gas sales volume (to 4,750mmscfd in 3Q16E, ‐3% QoQ from the seasonal high in 2Q). Upward revision on 2016‐18 earnings estimates We make an upward revision on PTT’s 2016‐18E earnings estimates by 15%/5%/3% to reflect 1) the upward revision to GSP sales volume by 3‐5% on the fine‐tuning of a higher operating rate and the kickoff of the debottlenecking phase of GSP #1 and GSP #6 in 1H16; 2) the fine‐tuning of a higher margin of the oil marketing business to Bt1.2/litre in 2016E (including stock gain in 1H16) and to Bt0.95/litre in 2017‐18E on a more conservative basis; and 3) the upward 2016E earnings revision on TOP and IRPC done earlier. We also revise up PTT’s SOTP‐based TP by 4% to 375/share (vs. Bt360 earlier). Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Core profit (Btmn) Net profit (Btmn) EPS (Bt) EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2014 2,605,062 82,066 58,678 20.34 (37.45) 11.00 239.22
2015 2,026,912 96,251 19,812 6.73 (66.91) 10.00 244.07
2016E 2,106,674 95,515 94,907 33.25 393.99 12.75 264.18
2017E 2,769,668 100,817 101,597 35.59 7.05 13.52 286.61
2018E 3,395,479 107,898 108,075 37.86 6.38 13.25 311.06
2014 17.01 5.39 1.45 3.2% 8.6% 60.5%
2015 51.41 4.77 1.42 2.9% 2.9% 44.9%
2016E 10.41 4.21 1.31 3.7% 13.1% 40.0%
2017E 9.72 3.58 1.21 3.9% 12.9% 22.6%
2018E 9.14 3.12 1.11 3.8% 12.7% 7.3%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
Figure 1: PTT’s 3Q16E earnings preview
Profit and Loss (Btmn) Year‐end 31 Dec
3Q15
2Q16
3Q16E
% YoY
% QoQ
9M16E
% YoY
2015
2016E
% YoY
% YTD
505,066
420,447
465,786
(7.8)
10.8
1,273,174
(18.2)
2,026,912
2,106,674
3.9
60.4
Gross profit
44,704
66,289
58,710
31.3
(11.4)
179,267
7.4
216,982
257,145
18.5
69.7
EBITDA
54,345
79,077
69,106
27.2
(12.6)
216,229
3.4
272,757
306,283
12.3
70.6
Interest expense
(7,528)
(7,245)
(7,130)
(5.3)
(1.6)
(21,609)
(7.1)
(30,089)
(24,215)
(19.5)
89.2
Other income
11,637
4,845
4,224
(63.7)
(12.8)
13,986
(31.9)
28,361
16,615
(41.4)
84.2
Income tax
(7,699)
(6,912)
(6,046)
(21.5)
(12.5)
(16,755)
(16.8)
(24,855)
(29,383)
18.2
57.0
Forex gain (loss)
(6,906)
(4,319)
1,934
nm
nm
(953)
(90.5)
(6,038)
(608)
(89.9)
156.7
(50,960)
‐
1,149
nm
nm
1,149
nm
(71,811)
‐
(100.0)
nm
263
839
812
208.7
(3.2)
2,516
(45.2)
6,032
‐
(100.0)
nm
16,136
(9,481)
(6,583)
nm
(30.6)
(24,794)
436.3
(10,783)
(34,628)
221.1
71.6
(26,581)
24,879
25,370
nm
2.0
73,918
274.3
19,812
94,907
379.0
77.9
Core profit (loss)
29,874
29,198
22,286
(25.4)
(23.7)
73,721
(3.2)
96,251
95,515
(0.8)
77.2
Reported EPS (Bt) Gross margin (%)
(9.14)
8.51
8.88
nm
4.4
269.2
6.73
33.25
394.0
77.1
8.9
15.8
12.6
25.6 14.1
10.71
12.21
EBITDA margin (%)
10.8
18.8
14.8
17.0
13.46
14.54
Net margin (%)
(5.3)
5.9
5.4
5.8
0.98
4.51
Current ratio (x)
2.0
2.2
2.2
2.2
2.16
1.92
Interest coverage (x)
2.5
6.5
5.2
5.6
4.29
6.90
Debt / equity (x)
1.0
0.9
0.7
0.7
0.95
0.73
BVPS (Bt)
244.8
255.6
258.4
258.4
244.1
264.2
ROE (%)
(14.9)
13.8
13.8
13.4
2.87
13.08
Revenue
Extraordinary Items Gn (Ls) from affiliates Minority interests Net profit (loss)
Source: KT ZMICO Research
Figure 2: Quarterly performance of sales volume
A)
PTT’s gas sales volume (mmscfd)
Source: Company, KT ZMICO Research
B) Sales volume breakdown of GSP products
Source: Company, KT ZMICO Research Note: NGL volume including volume of new product called “Pentane”
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
Figure 3: PTT’s PBV band
Source: Bloomberg, KT ZMICO Research
Source: Bloomberg, KT ZMICO Research
Figure 4: PTT’s valuation comparison with regional peers NAME PETROCHINA CO LTD‐H SINOPEC SHANGHAI PETROCHEM‐H CHINA CITIC RESOURCES HOLDINGS LTD CNOOC LTD HONG KONG BHARAT PETROLEUM CORP LTD HINDUSTAN PETROLEUM CORP INDIAN OIL CORP LTD OIL & NATURAL GAS CORP LTD RELIANCE INDUSTRIES LTD INDIA HANWHA CHEMICAL CORP LG CHEM LTD SK INNOVATION CO LTD LOTTE CHEMICAL CORP S. KOREA FORMOSA PLASTICS CORP NAN YA PLASTICS CORP FAR EASTERN NEW CENTURY CORP TAIWAN PTT PCL PTT EXPLOR & PROD PUBLIC CO THAILAND AVERAGE
Mkt Cap (US$Mn) 217,570 9,318 983 56,823 14,493 7,108 23,534 37,051 51,040 3,898 14,282 12,248 8,645 17,227 16,512 4,147 28,245 9,446
PER (x) 16E 17E n.m. 18.4 8.0 9.2 8.0 13.8
PBV (x) 16E 17E 0.8 0.8 1.8 1.6 1.3 1.2
EV/EBITDA (x) 16E 17E 7.2 6.2 6.9 7.8 7.0 7.0
n.a. n.a. n.a.
n.a. 15.0 15.0
2.1 1.2 1.7
2.5 1.2 1.8
28.5 6.2 17.3
19.0 4.0 11.5
12.3 10.1 10.6 13.6 11.9 11.7
11.3 9.8 9.9 11.0 10.9 10.6
2.9 2.3 1.8 1.3 1.2 1.9
2.5 2.0 1.6 1.2 1.1 1.7
8.5 7.3 7.2 5.8 10.0 7.8
7.6 6.9 6.8 4.9 8.3 6.9
6.2 12.8 7.4 6.2 8.1
7.0 11.5 7.5 6.5 8.1
0.9 1.3 0.8 1.1 1.0
0.8 1.2 0.8 0.9 0.9
6.6 5.2 4.2 4.1 5.0
6.9 5.0 4.4 4.2 5.1
16.6 15.9 20.1 17.5
16.1 17.0 15.7 16.2
1.9 1.6 0.7 1.4
1.8 1.5 0.7 1.3
25.8 15.5 10.6 17.3
20.3 14.7 9.9 14.9
10.4 20.7 15.5 12.2
9.7 12.4 11.0 12.5
1.3 0.9 1.1 1.4
1.2 0.8 1.0 1.3
4.2 3.4 3.8 9.7
3.6 3.1 3.3 8.1
YLD (%) 16E 17E 0.7 2.1 3.5 3.1 2.1 2.6 n.a. n.a. 2.5 3.1 2.5 3.1 2.5 2.7 2.8 2.8 2.8 2.9 2.9 3.1 1.1 1.2 2.4 2.6 0.9 1.0 1.9 1.9 2.7 2.7 0.9 0.9 1.6 1.6 4.3 4.3 4.6 4.0 3.8 4.8 4.2 4.3 3.7 3.9 3.9 4.0 3.8 4.0 2.8 3.0
Source: KT ZMICO Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 5
ROE (%) 16E 17E 0.8 3.8 22.3 17.0 11.6 10.4 (14.0) (0.4) (7.2)
(15.7) 6.7 (4.5)
25.2 24.7 18.2 9.4 10.7 17.6
23.9 21.9 17.2 10.8 10.7 16.9
14.7 10.0 11.3 19.4 13.8
11.8 10.3 10.3 15.8 12.0
10.9 9.4 3.9 8.1
11.1 8.9 4.4 8.2
13.1 4.0 8.6 8.7
12.9 6.8 9.9 8.8
Financial tables PROFIT & LOSS (Btm) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Other income / exp. EBT Corporate tax Forex gain (loss) Extra Items Gain (loss) from affiliates Minority interests Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btm) Cash and equivalents Accounts receivable Inventories PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Paid‐up shares Shareholder equity Minority interests Total liab. & shareholder equity CASH FLOW (Btm) Net income Forex and other extraordinary adjustments Depreciation & amortization Change in working capital Cash flow from operations Capex (Invest)/Divest Others Cash flow from investing Debt financing (repayment) Equity financing Dividend payment Others Cash flow from financing Net change in cash Free cash flow FCF per share (Bt) PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2014 2,605,062 (2,384,840) 220,222 (95,753) 260,033 135,563 124,469 (33,033) 36,926 128,361 (38,006) 11,610 (34,999) 860 (9,149) 58,678 20.34 20.34 82,066 28.73 11.00
2015 2,026,912 (1,809,930) 216,982 (87,986) 272,757 143,761 128,996 (30,089) 28,361 127,267 (24,855) (6,038) (71,811) 6,032 (10,783) 19,812 6.73 6.73 96,251 33.70 10.00
2016E 2,106,674 (1,849,529) 257,145 (90,019) 306,283 139,157 167,126 (24,215) 16,615 159,526 (29,383) (608) 0 0 (34,628) 94,907 33.25 33.25 95,515 33.44 12.75
2017E 2,769,668 (2,468,919) 300,749 (113,714) 327,622 140,587 187,036 (21,254) 15,589 181,371 (40,185) 780 0 0 (40,369) 101,597 35.59 35.59 100,817 35.30 13.52
2018E 3,395,479 (3,062,194) 333,285 (135,652) 337,267 139,635 197,633 (18,802) 15,580 194,411 (43,898) 177 0 0 (42,615) 108,075 37.86 37.86 107,898 37.78 13.25
2014 316,757 220,142 147,930 1,111,484 454,038 2,250,351 137,118 592,982 1,195,657 28,563 683,287 371,408 2,250,351
2015 346,725 195,484 115,729 1,124,965 391,093 2,173,996 81,094 578,753 1,086,309 28,563 697,147 390,540 2,173,996
2016E 251,140 184,466 138,423 1,191,055 390,739 2,155,823 82,604 470,100 976,078 28,563 754,577 425,168 2,155,823
2017E 312,543 222,441 163,380 1,170,843 389,691 2,258,897 94,130 403,811 974,710 28,563 818,651 465,536 2,258,897
2018E 373,053 258,239 187,652 1,146,558 389,523 2,355,025 105,545 332,016 958,385 28,563 888,488 508,152 2,355,025
2014 58,678 (11,610) 135,563 (86,852) 95,779 (344,007)
2015 19,812 6,038 143,761 18,163 187,775 (130,431)
2016E 94,907 608 139,157 15,686 250,358 (205,247)
2017E 101,597 (780) 140,587 24,533 265,936 (120,375)
2018E 108,075 (177) 139,635 18,273 265,805 (115,350)
(344,007) 243,751 (31,715) (34,276) 226,855 404,615 156,387 (248,228) (86.95)
(130,431) (70,253) 19,289 (29,991) 53,580 (27,375) 29,968 57,343 20.09
(205,247) (107,143) (39,614) (32,490) 38,550 (140,697) (95,586) 45,111 15.80
(120,375) (54,762) (40,369) (37,523) 48,495 (84,159) 61,403 145,562 50.99
(115,350) (60,381) (42,615) (38,238) 51,290 (89,944) 60,511 150,455 52.70
2014 (8.4) 19.3 (37.5) 8.5 10.0 4.8 2.3 3.2 29.6
2015 (22.2) 4.9 (66.9) 10.7 13.5 6.4 1.0 4.7 19.5
2016E 3.9 12.3 394.0 12.2 14.5 7.9 4.5 4.5 18.4
2017E 31.5 7.0 7.0 10.9 11.8 6.8 3.7 3.6 22.2
2018E 22.6 2.9 6.4 9.8 9.9 5.8 3.2 3.2 22.6
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 5
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, PACE, TPOLY, M‐CHAI, TFD, SUTHA. KT ZMICO is a co‐underwriter of ALLA.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Anti‐corruption Progress Indicator Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC)
Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independent external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market UNDERWEIGHT: The industry, as defined by the analyst's returns over a six‐month period due to specific coverage universe, is expected to underperform the relevant catalysts primary market index by 10% over the next 12 months. SELL: Expecting negative total returns of 10% or more over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 5 of 5
th
th
th
th
KT•ZMICO Securities Company Limited
st
8 , 15 -17 , 19 , 21 Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok 10500 Telephone: (66-2) 695-5000
Phaholyothin Branch
rd
Fax. (66-2) 631-1709
Ploenchit Branch
th
nd
2
Sindhorn Branch
3 Floor, Shinnawatra Tower II,
8 Floor, Ton Son Tower,
1291/1 Phaholyothin Road,
900 Ploenchit Road, Lumpini,
Floor, Sindhorn Tower 1, 130-132 Wireless Road, Lumpini,
Phayathai, Bangkok 10400
Pathumwan, Bangkok 10330
Pathumwan, Bangkok 10330
Telephone: (66-2) 686-1500
Telephone: (66-2) 626-6000
Telephone: (66-2) 627-3550
Fax. (66-2) 686-1666
Fax. (66-2) 626-6111
Fax. (66-2) 627-3582, 627-3600
Nakhon Pathom Branch 1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
Chachoengsao Branch
Viphavadee Branch
Phitsanulok Branch
G Floor, Lao Peng Nguan 1 Bldg.,
Krung Thai Bank, Singhawat Branch
333 Soi Cheypuand, Viphavadee-Rangsit Road,
114 Singhawat Road,
Ladyao, Jatujak, Bangkok 10900
Muang, Phitsanulok 65000
Telephone: (66-2) 618-8500
Telephone: 083-490-2873
Fax. (66-2) 618-8569
th
Chonburi Branch
Pattaya Branch
108/34-36 Mahajakkrapad Road,
4 Floor, Forum Plaza Bldg.,
382/6-8 Moo 9, T. NongPrue,
T.Namuang, A.Muang,
870/52 Sukhumvit Road, T. Bangplasoy,
A. Banglamung, Cholburi 20260
Chachoengsao 24000
A. Muang, Cholburi 20000
Telephone: (038) 362-420-9
Telephone: (038) 813-088
Telephone: (038) 287-635
Fax. (038) 362-430
Fax. (038) 813-099
Fax. (038) 287-637
Khon Kaen Branch
5th Floor, Charoen Thani Princess Hotel,
Hat Yai Branch
Sriworajak Building Branch
200/301 Juldis Hatyai Plaza Floor 3,
1st – 2nd Floor, Sriworajak Building, 222
260 Srichan Road, T. Naimuang,
Niphat-Uthit 3 Rd,
Luang Road, Pomprab,
A. Muang, Khon Kaen 40000
Hatyai Songkhla 90110
Bankgok 10100
Telephone: (043) 389-171-193
Telephone: (074) 355-530-3
Telephone: (02) 689-3100
Fax. (043) 389-209
Fax: (074) 355-534
Fax. (02) 689-3199
Central World Branch
Chiang Mai Branch
Phuket Branch
999/9 The Offices at Central World,
422/49 Changklan Road, Changklan
22/61-63, Luang Por Wat Chalong Road,
16th Fl., Rama 1 Rd, Pathumwan,
Subdistrict, Amphoe Meuang,
Talat Yai, Mueang Phuket,
Bangkok 10330
Chiang Mai 50100
Phuket 83000
Telephone: (66-2) 673-5000,
Telephone: (053) 270-072
Tel. (076) 222-811,(076) 222-683
(66-2) 264-5888 Fax. (66-2) 264-5899
Fax: (053) 272-618
Fax. (076) 222-861
Pak Chong Branch
Cyber Branch @ North Nana
173 175, Mittapap Road,
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd.,Klong Toey Nua Subdistrict , Wattana District, Bangkok 10110 Telephone: 083-490-2871
Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Tel. (044) 279-511 Fax. (044) 279-574
Nakhon Ratchasima Branch
Bangkhae Branch
6th Floor The Mall Group Building Bangkhae 275 Moo 1 Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Tel. (66-2) 454-9979 Fax. (66-2) 454-9970
624/9 Changphuek Road, . Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171 Information herein was obtained from sources believed to be reliable, but its completeness and accuracy are not guaranteed. All opinions expressed constitute our views on that date and are not intended as an offer or solicitation to sell or buy any securities. Investors should exercise care when making a decision to invest in securities. No one may modify or distribute any part of this report unless written permission is first received from Seamico Securities Plc. If any modifications are made, quotes or references taken from the report and the report date must be clearly mentioned and must not cause misunderstanding or damage to the company.
Company Update
Close Bt346.00
Energy & Utilities November 1, 2016
Earnings upgrade/ Earnings downgrade / Overview unchanged
Gas business behind the solid earnings Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
29.905
32.731
KT ZMICO vs. consensus Share data
11.2%
8.7%
Reuters / Bloomberg
PTT.BK/PTT TB
Paid‐up Shares (m)
2,856.30
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
988.00/28,237.00
Foreign limit / actual (%)
30.00/15.92
52 week High / Low (Bt)
363.00/197.00
Avg. daily T/O (shares 000) NVDR (%)
6,985.00 6.60
Estimated free float (%)
48.87
Beta
1.56
URL
www.pttplc.com
CGR
Anti‐corruption
Level 4 (Certified)
Patcharin Karsemarnuntana Analyst, no 17834 [email protected] 66 (0) 2695‐5837
ST and LT catalysts We expect PTT’s 2016‐18E earnings to be solid with the contribution of the gas business still the growth catalyst for the years ahead. Moreover, the company’s long‐term growth looks promising with the country remaining dependent on gas as the major fuel; meanwhile, the targeted spinoff of its oil business and the upcoming 21st petroleum bidding with PTTEP’s involvement will be price catalysts in 2017E. The stock is currently trading at 0.09x 2017E PBV/ROE, making it more appealing than PTTEP at 0.12x 2017E PBV/ROE. Thus, we maintain an “Outperform” rating with the 2017E SOTP‐ based TP raised slightly to Bt375. Expect solid 3Q16E NP of Bt25.4bn with GSP and oil marketing as main support We expect PTT to deliver solid NP of Bt25.4bn in 3Q16E, reversing from a huge net loss in 3Q15 (due to huge Bt51bn impairment charges) but flat QoQ, with the improving performance at its GSP and oil marketing as the main support, against the mixed performance of its subsidiary/affiliates on a QoQ basis (with a higher contribution from PTTEP and PTTGC but a lower contribution from TOP and IRPC), along with forex gain in the quarter. PTT’s performance itself should be well supported by the improving performance at the GSP business (driven by larger volume to 1.72mn tons in 3Q16E, +17% QoQ given no plant turnaround, and widening product spreads on lower feed cost) and the oil marketing business (following sustained high sales volume and margin QoQ at 6,620mn litres and Bt1.3/litre, respectively, in 3Q16E), more than offsetting the weakening gas sales volume (to 4,750mmscfd in 3Q16E, ‐3% QoQ from the seasonal high in 2Q). Upward revision on 2016‐18 earnings estimates We make an upward revision on PTT’s 2016‐18E earnings estimates by 15%/5%/3% to reflect 1) the upward revision to GSP sales volume by 3‐5% on the fine‐tuning of a higher operating rate and the kickoff of the debottlenecking phase of GSP #1 and GSP #6 in 1H16; 2) the fine‐tuning of a higher margin of the oil marketing business to Bt1.2/litre in 2016E (including stock gain in 1H16) and to Bt0.95/litre in 2017‐18E on a more conservative basis; and 3) the upward 2016E earnings revision on TOP and IRPC done earlier. We also revise up PTT’s SOTP‐based TP by 4% to 375/share (vs. Bt360 earlier). Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Core profit (Btmn) Net profit (Btmn) EPS (Bt) EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2014 2,605,062 82,066 58,678 20.34 (37.45) 11.00 239.22
2015 2,026,912 96,251 19,812 6.73 (66.91) 10.00 244.07
2016E 2,106,674 95,515 94,907 33.25 393.99 12.75 264.18
2017E 2,769,668 100,817 101,597 35.59 7.05 13.52 286.61
2018E 3,395,479 107,898 108,075 37.86 6.38 13.25 311.06
2014 17.01 5.39 1.45 3.2% 8.6% 60.5%
2015 51.41 4.77 1.42 2.9% 2.9% 44.9%
2016E 10.41 4.21 1.31 3.7% 13.1% 40.0%
2017E 9.72 3.58 1.21 3.9% 12.9% 22.6%
2018E 9.14 3.12 1.11 3.8% 12.7% 7.3%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
Figure 1: PTT’s 3Q16E earnings preview
Profit and Loss (Btmn) Year‐end 31 Dec
3Q15
2Q16
3Q16E
% YoY
% QoQ
9M16E
% YoY
2015
2016E
% YoY
% YTD
505,066
420,447
465,786
(7.8)
10.8
1,273,174
(18.2)
2,026,912
2,106,674
3.9
60.4
Gross profit
44,704
66,289
58,710
31.3
(11.4)
179,267
7.4
216,982
257,145
18.5
69.7
EBITDA
54,345
79,077
69,106
27.2
(12.6)
216,229
3.4
272,757
306,283
12.3
70.6
Interest expense
(7,528)
(7,245)
(7,130)
(5.3)
(1.6)
(21,609)
(7.1)
(30,089)
(24,215)
(19.5)
89.2
Other income
11,637
4,845
4,224
(63.7)
(12.8)
13,986
(31.9)
28,361
16,615
(41.4)
84.2
Income tax
(7,699)
(6,912)
(6,046)
(21.5)
(12.5)
(16,755)
(16.8)
(24,855)
(29,383)
18.2
57.0
Forex gain (loss)
(6,906)
(4,319)
1,934
nm
nm
(953)
(90.5)
(6,038)
(608)
(89.9)
156.7
(50,960)
‐
1,149
nm
nm
1,149
nm
(71,811)
‐
(100.0)
nm
263
839
812
208.7
(3.2)
2,516
(45.2)
6,032
‐
(100.0)
nm
16,136
(9,481)
(6,583)
nm
(30.6)
(24,794)
436.3
(10,783)
(34,628)
221.1
71.6
(26,581)
24,879
25,370
nm
2.0
73,918
274.3
19,812
94,907
379.0
77.9
Core profit (loss)
29,874
29,198
22,286
(25.4)
(23.7)
73,721
(3.2)
96,251
95,515
(0.8)
77.2
Reported EPS (Bt) Gross margin (%)
(9.14)
8.51
8.88
nm
4.4
269.2
6.73
33.25
394.0
77.1
8.9
15.8
12.6
25.6 14.1
10.71
12.21
EBITDA margin (%)
10.8
18.8
14.8
17.0
13.46
14.54
Net margin (%)
(5.3)
5.9
5.4
5.8
0.98
4.51
Current ratio (x)
2.0
2.2
2.2
2.2
2.16
1.92
Interest coverage (x)
2.5
6.5
5.2
5.6
4.29
6.90
Debt / equity (x)
1.0
0.9
0.7
0.7
0.95
0.73
BVPS (Bt)
244.8
255.6
258.4
258.4
244.1
264.2
ROE (%)
(14.9)
13.8
13.8
13.4
2.87
13.08
Revenue
Extraordinary Items Gn (Ls) from affiliates Minority interests Net profit (loss)
Source: KT ZMICO Research
Figure 2: Quarterly performance of sales volume
A)
PTT’s gas sales volume (mmscfd)
Source: Company, KT ZMICO Research
B) Sales volume breakdown of GSP products
Source: Company, KT ZMICO Research Note: NGL volume including volume of new product called “Pentane”
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
Figure 3: PTT’s PBV band
Source: Bloomberg, KT ZMICO Research
Source: Bloomberg, KT ZMICO Research
Figure 4: PTT’s valuation comparison with regional peers NAME PETROCHINA CO LTD‐H SINOPEC SHANGHAI PETROCHEM‐H CHINA CITIC RESOURCES HOLDINGS LTD CNOOC LTD HONG KONG BHARAT PETROLEUM CORP LTD HINDUSTAN PETROLEUM CORP INDIAN OIL CORP LTD OIL & NATURAL GAS CORP LTD RELIANCE INDUSTRIES LTD INDIA HANWHA CHEMICAL CORP LG CHEM LTD SK INNOVATION CO LTD LOTTE CHEMICAL CORP S. KOREA FORMOSA PLASTICS CORP NAN YA PLASTICS CORP FAR EASTERN NEW CENTURY CORP TAIWAN PTT PCL PTT EXPLOR & PROD PUBLIC CO THAILAND AVERAGE
Mkt Cap (US$Mn) 217,570 9,318 983 56,823 14,493 7,108 23,534 37,051 51,040 3,898 14,282 12,248 8,645 17,227 16,512 4,147 28,245 9,446
PER (x) 16E 17E n.m. 18.4 8.0 9.2 8.0 13.8
PBV (x) 16E 17E 0.8 0.8 1.8 1.6 1.3 1.2
EV/EBITDA (x) 16E 17E 7.2 6.2 6.9 7.8 7.0 7.0
n.a. n.a. n.a.
n.a. 15.0 15.0
2.1 1.2 1.7
2.5 1.2 1.8
28.5 6.2 17.3
19.0 4.0 11.5
12.3 10.1 10.6 13.6 11.9 11.7
11.3 9.8 9.9 11.0 10.9 10.6
2.9 2.3 1.8 1.3 1.2 1.9
2.5 2.0 1.6 1.2 1.1 1.7
8.5 7.3 7.2 5.8 10.0 7.8
7.6 6.9 6.8 4.9 8.3 6.9
6.2 12.8 7.4 6.2 8.1
7.0 11.5 7.5 6.5 8.1
0.9 1.3 0.8 1.1 1.0
0.8 1.2 0.8 0.9 0.9
6.6 5.2 4.2 4.1 5.0
6.9 5.0 4.4 4.2 5.1
16.6 15.9 20.1 17.5
16.1 17.0 15.7 16.2
1.9 1.6 0.7 1.4
1.8 1.5 0.7 1.3
25.8 15.5 10.6 17.3
20.3 14.7 9.9 14.9
10.4 20.7 15.5 12.2
9.7 12.4 11.0 12.5
1.3 0.9 1.1 1.4
1.2 0.8 1.0 1.3
4.2 3.4 3.8 9.7
3.6 3.1 3.3 8.1
YLD (%) 16E 17E 0.7 2.1 3.5 3.1 2.1 2.6 n.a. n.a. 2.5 3.1 2.5 3.1 2.5 2.7 2.8 2.8 2.8 2.9 2.9 3.1 1.1 1.2 2.4 2.6 0.9 1.0 1.9 1.9 2.7 2.7 0.9 0.9 1.6 1.6 4.3 4.3 4.6 4.0 3.8 4.8 4.2 4.3 3.7 3.9 3.9 4.0 3.8 4.0 2.8 3.0
Source: KT ZMICO Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 5
ROE (%) 16E 17E 0.8 3.8 22.3 17.0 11.6 10.4 (14.0) (0.4) (7.2)
(15.7) 6.7 (4.5)
25.2 24.7 18.2 9.4 10.7 17.6
23.9 21.9 17.2 10.8 10.7 16.9
14.7 10.0 11.3 19.4 13.8
11.8 10.3 10.3 15.8 12.0
10.9 9.4 3.9 8.1
11.1 8.9 4.4 8.2
13.1 4.0 8.6 8.7
12.9 6.8 9.9 8.8
Financial tables PROFIT & LOSS (Btm) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Other income / exp. EBT Corporate tax Forex gain (loss) Extra Items Gain (loss) from affiliates Minority interests Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btm) Cash and equivalents Accounts receivable Inventories PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Paid‐up shares Shareholder equity Minority interests Total liab. & shareholder equity CASH FLOW (Btm) Net income Forex and other extraordinary adjustments Depreciation & amortization Change in working capital Cash flow from operations Capex (Invest)/Divest Others Cash flow from investing Debt financing (repayment) Equity financing Dividend payment Others Cash flow from financing Net change in cash Free cash flow FCF per share (Bt) PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2014 2,605,062 (2,384,840) 220,222 (95,753) 260,033 135,563 124,469 (33,033) 36,926 128,361 (38,006) 11,610 (34,999) 860 (9,149) 58,678 20.34 20.34 82,066 28.73 11.00
2015 2,026,912 (1,809,930) 216,982 (87,986) 272,757 143,761 128,996 (30,089) 28,361 127,267 (24,855) (6,038) (71,811) 6,032 (10,783) 19,812 6.73 6.73 96,251 33.70 10.00
2016E 2,106,674 (1,849,529) 257,145 (90,019) 306,283 139,157 167,126 (24,215) 16,615 159,526 (29,383) (608) 0 0 (34,628) 94,907 33.25 33.25 95,515 33.44 12.75
2017E 2,769,668 (2,468,919) 300,749 (113,714) 327,622 140,587 187,036 (21,254) 15,589 181,371 (40,185) 780 0 0 (40,369) 101,597 35.59 35.59 100,817 35.30 13.52
2018E 3,395,479 (3,062,194) 333,285 (135,652) 337,267 139,635 197,633 (18,802) 15,580 194,411 (43,898) 177 0 0 (42,615) 108,075 37.86 37.86 107,898 37.78 13.25
2014 316,757 220,142 147,930 1,111,484 454,038 2,250,351 137,118 592,982 1,195,657 28,563 683,287 371,408 2,250,351
2015 346,725 195,484 115,729 1,124,965 391,093 2,173,996 81,094 578,753 1,086,309 28,563 697,147 390,540 2,173,996
2016E 251,140 184,466 138,423 1,191,055 390,739 2,155,823 82,604 470,100 976,078 28,563 754,577 425,168 2,155,823
2017E 312,543 222,441 163,380 1,170,843 389,691 2,258,897 94,130 403,811 974,710 28,563 818,651 465,536 2,258,897
2018E 373,053 258,239 187,652 1,146,558 389,523 2,355,025 105,545 332,016 958,385 28,563 888,488 508,152 2,355,025
2014 58,678 (11,610) 135,563 (86,852) 95,779 (344,007)
2015 19,812 6,038 143,761 18,163 187,775 (130,431)
2016E 94,907 608 139,157 15,686 250,358 (205,247)
2017E 101,597 (780) 140,587 24,533 265,936 (120,375)
2018E 108,075 (177) 139,635 18,273 265,805 (115,350)
(344,007) 243,751 (31,715) (34,276) 226,855 404,615 156,387 (248,228) (86.95)
(130,431) (70,253) 19,289 (29,991) 53,580 (27,375) 29,968 57,343 20.09
(205,247) (107,143) (39,614) (32,490) 38,550 (140,697) (95,586) 45,111 15.80
(120,375) (54,762) (40,369) (37,523) 48,495 (84,159) 61,403 145,562 50.99
(115,350) (60,381) (42,615) (38,238) 51,290 (89,944) 60,511 150,455 52.70
2014 (8.4) 19.3 (37.5) 8.5 10.0 4.8 2.3 3.2 29.6
2015 (22.2) 4.9 (66.9) 10.7 13.5 6.4 1.0 4.7 19.5
2016E 3.9 12.3 394.0 12.2 14.5 7.9 4.5 4.5 18.4
2017E 31.5 7.0 7.0 10.9 11.8 6.8 3.7 3.6 22.2
2018E 22.6 2.9 6.4 9.8 9.9 5.8 3.2 3.2 22.6
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 5
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, PACE, TPOLY, M‐CHAI, TFD, SUTHA. KT ZMICO is a co‐underwriter of ALLA.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Anti‐corruption Progress Indicator Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC)
Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independent external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market UNDERWEIGHT: The industry, as defined by the analyst's returns over a six‐month period due to specific coverage universe, is expected to underperform the relevant catalysts primary market index by 10% over the next 12 months. SELL: Expecting negative total returns of 10% or more over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 5 of 5
th
th
th
th
KT•ZMICO Securities Company Limited
st
8 , 15 -17 , 19 , 21 Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok 10500 Telephone: (66-2) 695-5000
Phaholyothin Branch
rd
Fax. (66-2) 631-1709
Ploenchit Branch
th
nd
2
Sindhorn Branch
3 Floor, Shinnawatra Tower II,
8 Floor, Ton Son Tower,
1291/1 Phaholyothin Road,
900 Ploenchit Road, Lumpini,
Floor, Sindhorn Tower 1, 130-132 Wireless Road, Lumpini,
Phayathai, Bangkok 10400
Pathumwan, Bangkok 10330
Pathumwan, Bangkok 10330
Telephone: (66-2) 686-1500
Telephone: (66-2) 626-6000
Telephone: (66-2) 627-3550
Fax. (66-2) 686-1666
Fax. (66-2) 626-6111
Fax. (66-2) 627-3582, 627-3600
Nakhon Pathom Branch 1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
Chachoengsao Branch
Viphavadee Branch
Phitsanulok Branch
G Floor, Lao Peng Nguan 1 Bldg.,
Krung Thai Bank, Singhawat Branch
333 Soi Cheypuand, Viphavadee-Rangsit Road,
114 Singhawat Road,
Ladyao, Jatujak, Bangkok 10900
Muang, Phitsanulok 65000
Telephone: (66-2) 618-8500
Telephone: 083-490-2873
Fax. (66-2) 618-8569
th
Chonburi Branch
Pattaya Branch
108/34-36 Mahajakkrapad Road,
4 Floor, Forum Plaza Bldg.,
382/6-8 Moo 9, T. NongPrue,
T.Namuang, A.Muang,
870/52 Sukhumvit Road, T. Bangplasoy,
A. Banglamung, Cholburi 20260
Chachoengsao 24000
A. Muang, Cholburi 20000
Telephone: (038) 362-420-9
Telephone: (038) 813-088
Telephone: (038) 287-635
Fax. (038) 362-430
Fax. (038) 813-099
Fax. (038) 287-637
Khon Kaen Branch
5th Floor, Charoen Thani Princess Hotel,
Hat Yai Branch
Sriworajak Building Branch
200/301 Juldis Hatyai Plaza Floor 3,
1st – 2nd Floor, Sriworajak Building, 222
260 Srichan Road, T. Naimuang,
Niphat-Uthit 3 Rd,
Luang Road, Pomprab,
A. Muang, Khon Kaen 40000
Hatyai Songkhla 90110
Bankgok 10100
Telephone: (043) 389-171-193
Telephone: (074) 355-530-3
Telephone: (02) 689-3100
Fax. (043) 389-209
Fax: (074) 355-534
Fax. (02) 689-3199
Central World Branch
Chiang Mai Branch
Phuket Branch
999/9 The Offices at Central World,
422/49 Changklan Road, Changklan
22/61-63, Luang Por Wat Chalong Road,
16th Fl., Rama 1 Rd, Pathumwan,
Subdistrict, Amphoe Meuang,
Talat Yai, Mueang Phuket,
Bangkok 10330
Chiang Mai 50100
Phuket 83000
Telephone: (66-2) 673-5000,
Telephone: (053) 270-072
Tel. (076) 222-811,(076) 222-683
(66-2) 264-5888 Fax. (66-2) 264-5899
Fax: (053) 272-618
Fax. (076) 222-861
Pak Chong Branch
Cyber Branch @ North Nana
173 175, Mittapap Road,
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd.,Klong Toey Nua Subdistrict , Wattana District, Bangkok 10110 Telephone: 083-490-2871
Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Tel. (044) 279-511 Fax. (044) 279-574
Nakhon Ratchasima Branch
Bangkhae Branch
6th Floor The Mall Group Building Bangkhae 275 Moo 1 Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Tel. (66-2) 454-9979 Fax. (66-2) 454-9970
624/9 Changphuek Road, . Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171 Information herein was obtained from sources believed to be reliable, but its completeness and accuracy are not guaranteed. All opinions expressed constitute our views on that date and are not intended as an offer or solicitation to sell or buy any securities. Investors should exercise care when making a decision to invest in securities. No one may modify or distribute any part of this report unless written permission is first received from Seamico Securities Plc. If any modifications are made, quotes or references taken from the report and the report date must be clearly mentioned and must not cause misunderstanding or damage to the company.
