Starts the year with soaring 1Q17 earnings
PTT Global Chemical
Outperform (17E TP Bt83.00)
Earnings Review
Close Bt72.00
Petrochemicals May 12, 2017
Beat forecast/ Below forecast / In line
Starts the year with soaring 1Q17 earnings Results date: May 11, 2017 Price Performance (%)
LT growth platform intact Given the company’s continuing earnings acceleration in 2017E, along with its position as the group’s petrochemical flagship with a fully‐ broadened product chain, especially after the cluster of asset injections from PTT (expected to be completed in 4Q17E) and its organic growth from new project expansion, we maintain our Outperform rating. Soaring 1Q17 NP of Bt13.2bn, beating the street forecast
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
6.662
7.214
KT ZMICO vs. consensus Share data
7.0%
6.5%
Reuters / Bloomberg
PTTGC.BK/PTTGC TB
Paid‐up Shares (m)
4,508.85
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
325.00/9,345.00
Foreign limit / actual (%)
37.00/20.81
52 week High / Low (Bt)
76.00/53.25
Avg. daily T/O (shares 000)
11,192.00
NVDR (%)
11.81
Estimated free float (%)
50
Beta
1.06
URL
www.pttgcgroup.com
CGR
Anti‐corruption
Level 4 (Certified)
Patcharin Karsemarnuntana Analyst, no 17834 [email protected] 66 (0) 2695‐5837
PTTGC delivered soaring NP of Bt13.2bn in 1Q17 (+180% YoY, +35% QoQ), ahead of our forecast and the street forecast by 10%/13%, with the higher‐than‐expected adjusted EBITDA margin of olefins and derivatives business as the main deviation (35% vs. our forecast of 32%). Meanwhile, its core profit stood high at Bt12.5bn (+212% YoY, +13.5% QoQ), with aromatics and olefins as the main catalysts following their positive price effect, particularly in the case of BZ, butadiene, MEG and polyethylene prices (see figures 2,3), which helped offset the lower U‐rate of the olefins fleet to 95% (vs. 100% in 4Q16) given the planned shutdowns of Oleflex and MEG, as well as the lower U‐rate of the aromatics units to 78% (vs. 90% in 1Q16, and 82% in 4Q16) given the shutdown of some small units. At the same time, there was less momentum on its refinery’s performance in 1Q17, particularly QoQ, with a sustained high U‐rate at 102% (103% in 4Q16) and a firm accounting GRM of US$6.76/bbl (vs. US$6.7/bbl in 4Q16), with weakening market GRM offset by lower stock impact and hedging impact. Earnings estimates maintained Given that the 1Q17 core earnings represent 39% of our full‐year forecast to be followed by fading earnings momentum in 2Q17E with an expected back‐to‐normal price level of BZ and butadiene (vs. the abnormal high in 1Q17 due to tight supply from firm demand and the plant turnaround/disrupted harvesting yield of natural rubber) along with the company’s planned shutdown of its Olefin #2/1 (39 days in May‐ Jun) and Aromatics #2 (45 days in Jun‐Jul) as the main weakness, we maintain our core profit of Bt32.2bn in 2017E. Meanwhile, the first contribution of the asset injection from PTT is expected in 4Q17E as scheduled, which will be a source of upside risk to our 2017E earnings by 2% (note that we put its first full‐year contribution starting from 2018E onwards). Financials and Valuation FY Ended 31 Dec Revenues (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 (%)
2015 403,440 20,502 4.55 33.52 2.80 51.35 2015 15.82 9.06 1.40 3.9% 9.0% 25.1%
2016 349,101 25,602 5.74 26.15 2.85 54.56 2016 12.54 7.86 1.32 4.0% 10.7% 20.7%
2017E 442,341 32,156 7.13 24.19 3.56 59.21 2017E 10.10 6.36 1.22 5.0% 12.5% 16.6%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2018E 472,181 34,656 7.68 7.78 3.84 63.33 2018E 9.37 6.00 1.14 5.3% 12.5% 7.7%
2019E 470,053 34,798 7.71 0.41 3.86 67.21 2019E 9.33 5.55 1.07 5.4% 11.8% ‐1.6%
Figure 1: PTTGC’s 1Q17 earnings review Profit and Loss (Btmn) Year‐end 31 Dec Revenue Gross profit EBITDA Interest expense Other income Income tax Forex gain (loss) Other extraordinary Items Gn (Ls) from affiliates Minority interests Net profit (loss) Core profit (loss) Reported EPS (Bt) Gross margin (%) EBITDA margin (%) Net margin (%) Current ratio (x) Interest coverage (x) Interest‐bearing debt / equity (x) BVPS (Bt) ROE (%)
1Q16 81,473 7,618 9,189 (1,090) 521 (623) 691 ‐ 178 (32) 4,707 4,016 1.06 9.4 11.3 5.8 2.8 4.6 0.5 52.2 8.1
4Q16 110,689 16,932 17,936 (1,030) (360) (1,001) (638) (656) 217 (185) 9,744 11,038 2.18 15.3 16.2 8.8 2.4 13.0 0.4 54.6 16.2
1Q17 108,042 16,297 18,348 (1,001) 1,314 (1,597) 654 ‐ 538 (68) 13,182 12,527 2.96 15.1 17.0 12.2 2.6 13.3 0.4 57.4 20.9
% YoY 32.6 113.9 99.7 (8.2) 152.0 156.3 (5.3) nm 201.6 114.5 180.0 211.9 179.2
% QoQ (2.4) (3.7) 2.3 (2.8) nm 59.6 nm (100.0) 147.4 (63.1) 35.3 13.5 35.8
2016 349,101 42,038 47,752 (4,220) 1,286 (3,025) 275 499 617 (278) 25,602 24,827 5.74 12.0 13.7 7.3 2.4 7.2 0.4 54.6 10.7
2017 442,341 49,483 56,756 (3,228) 1,700 (5,129) ‐ ‐ 936 (300) 32,156 32,156 7.13 11.2 12.8 7.3 2.0 11.8 0.3 59.2 12.5
% YoY 26.7 17.7 18.9 (23.5) 32.2 69.6 (100.0) (100.0) 51.6 7.8 25.6 29.5 24.2
YTD (% of 17E) 24% 33% 32% 31% 77% 31% nm nm 57% 23% 41% 39% 42%
Source: KT ZMICO Research
Figure 2: Price and spread movement ‐ olefins and polymer chain Unit: US$/ton
PTTGC – related products and spread Derivatives
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 Apr % YoY % QoQ
Spread
Naphtha MOPJ
Ethylene SEA
Propylene SEA
HDPE SEA
LLDPE SEA
LDPE SEA
MEG SEA
Butadiene SEA
961 858 920 946 935 951 913 647 494 563 461 445 344 411 389 450 499 487 45.1 10.9
1,395 1,265 1,322 1,427 1,441 1,447 1,478 1,214 1,026 1,386 970 1,033 1,012 1,099 1,057 978 1,090 1,058 7.7 11.5
1,306 1,297 1,336 1,366 1,369 1,279 1,301 1,032 833 940 736 587 649 719 728 722 933 760 43.8 29.2
1,482 1,443 1,489 1,536 1,554 1,569 1,604 1,448 1,188 1,375 1,234 1,153 1,103 1,153 1,139 1,134 1,176 1,170 6.6 3.7
1,477 1,433 1,490 1,549 1,560 1,578 1,601 1,431 1,181 1,375 1,224 1,158 1,114 1,181 1,193 1,191 1,215 1,200 9.1 2.0
1,459 1,444 1,569 1,664 1,639 1,605 1,601 1,440 1,192 1,401 1,244 1,158 1,117 1,183 1,195 1,233 1,330 1,313 19.1 7.9
1,282 1,173 1,143 1,208 1,182 1,093 1,143 1,035 903 1,027 1,025 837 732 820 762 818 1,078 1,013 47.3 31.8
1,731 1,344 1,129 1,524 1,348 1,289 1,448 1,024 710 1,100 972 702 864 990 1,069 1,583 2,545 1,300 194.6 60.8
Ethylene - MOPJ
Propylene - MOPJ
HDPE - MOPJ
LLDPE - MOPJ
LDPE - MOPJ
MEG (0.65 Ethylene)
434 407 402 481 507 496 565 567 532 823 509 588 668 688 668 528 591 571 (11.5) 11.9
345 439 416 420 434 328 388 385 339 377 275 142 305 308 339 272 434 273 42.3 59.6
521 585 569 590 620 618 691 802 694 812 774 708 759 742 749 684 677 683 (10.8) (1.0)
515 575 570 603 625 627 688 785 687 811 763 713 770 770 804 741 717 713 (6.9) (3.2)
498 586 649 718 705 653 688 793 698 837 783 713 773 773 806 783 831 825 7.5 6.1
375 351 284 281 245 152 182 246 236 126 394 166 74 105 75 182 370 325 398.0 102.7
Source: PTTGC, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Figure 3: Price and spread movement – aromatics chain Unit : US$/ton
PTTGC – related products and spreads
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 Apr % YoY % QoQ
PX Spot Taiwan 1,635 1,443 1,485 1,432 1,284 1,259 1,346 999 827 935 820 793 750 805 806 815 889 855 18.5 9.1
PX FECP 1,618 1,409 1,440 1,440 1,303 1,256 1,350 1,035 785 924 823 786 718 799 789 790 885 905 23.3 12.0
BZ Spot Korea 1,379 1,286 1,258 1,283 1,297 1,293 1,301 954 670 804 661 606 574 628 640 720 923 838 60.8 28.2
Condensate Erawan 948 870 929 937 917 922 872 634 453 533 427 375 303 394 386 432 465 465 53.5 7.6
PX Spot Taiwan ‐ Condensate 687 572 556 494 367 337 474 365 374 403 394 417 448 411 420 383 425 390 (5.1) 11.0
PX FECP ‐ Condensate 670 539 511 502 386 334 479 401 333 391 397 410 415 405 402 358 420 440 1.2 17.3
BZ Spot‐ Condensate 431 416 329 346 380 370 430 320 217 271 235 230 272 234 253 288 458 373 68.4 59.0
Source: PTTGC, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
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, M‐CHAI, POMPUI, TFD, TTL, NMG.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Satisfactory (scores: 60 – 69) Very Good (scores: 80 – 89) Pass (scores: 50 – 59) Good (scores: 70 – 79) 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 4 of 4
KT ZMICO Securities Company Limited Head Office
WWW.KTZMICO.COM
8th, 15th‐17th,19th, 21st Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok, Thailand 10500 Telephone: (66‐2) 695‐5000 Fax: (66‐2) 695‐5173 KT ZMICO Connect 662 695 5555
Central World Branch
Amarin Branch
22nd Floor, Amarin Building, 496‐502 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 018‐6200 Fax: (66‐2) 018‐6298, (66‐2) 018‐6299
8th Floor, Ton Son Tower, 900 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 626‐6000 Fax: (66‐2) 626‐6111
Phaholyothin Branch
Sindhorn Branch
Viphavadee Branch
2nd Floor, Sindhorn Tower 1, 130‐132 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 627‐3550 Fax: (66‐2) 627‐3582, 627‐3600
G Floor, Lao Peng Nguan 1 Bldg., 333 Soi Cheypuand, Viphavadee‐Rangsit Road, Ladyao, Jatujak, Bangkok 10900 Telephone: (66‐2) 013‐8600 Fax: (66‐2) 618‐8569
BangKhae Branch
Chiang Mai Branch
Pak Chong Branch
999/9 The Offices at Central World, 16th Fl., Rama 1 Rd, Pathumwan, Bangkok 10330 Telephone: (66‐2) 264‐5888 Fax: (66‐2) 264 5899
1291/1, Shinnawatra Tower II, 3rd Floor, Phaholyothin Road, Phayathai, Bangkok 10400 Telephone: (66‐2) 686‐1500 Fax: (66‐2) 686‐1666
Ploenchit Branch
518 The Mall Group Building Bangkhae Branch, 6th Floor, Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Telephone: (66‐2) 454‐9979 Fax: (66‐2) 454‐9970
422/49 Changklan Road, Changklan Subdistrict, Amphoe Meuang, Chiang Mai 50100 Telephone: (053) 270‐072 Fax: (053) 272‐618
173 175, Mittapap Road, Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Telephone: (044) 279‐511 Fax: (044) 279‐574
Korat Branch
Khon Kaen Branch
Chonburi Branch
624/9 Changphuek Road, T.Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171
5th Floor, Charoen Thani Princess Hotel, 260 Srichan Road, T. Naimuang, A. Muang, Khon Kaen 40000 Telephone: (043) 389‐171‐193 Fax: (043) 389‐209
4th Floor, Forum Plaza Bldg., 870/52 Sukhumvit Road, T. Bangplasoy, A. Muang, Cholburi 20000 Telephone: (038) 287‐635 Fax: (038) 287‐637
Pattaya Branch
Chachoengsao Branch
Hat Yai Branch
Easy Point 2, 392/65 Moo.9, T.Nong Prue, A. Bang Lamung, Chonburi 20260 Telephone: (038) 420‐965 Fax: (038) 420‐968
108/34‐36 Mahajakkrapad Road, T.Namuang, A.Muang, Chachoengsao 24000 Telephone: (038) 813‐088 Fax: (038) 813‐099
200/301, 200/303 JULDIS HATYAI PLAZA Floor 3 , Niphat‐Uthit 3 Rd, Hatyai Songkhla 90110 Telephone: (074) 355530‐3 Fax: (074) 355534
Phuket Branch
22/61‐63, Luang Por Wat Chalong Road, Talat Yai, Mueang Phuket, Phuket 83000 Telephone: (076) 222‐811, (076) 222‐683 Fax: (076) 222‐861
Phitsanulok Branch
227/171 Borom Trilokkanat Road, Muang, Phitsanulok 65000 Telephone: 055‐219‐255 to 8 Fax: 055‐219‐259
Nakhon Pathom
Cyber Branch Ayutthaya
Cyber Branch @ North Nana
Cyber Branch Chiangrai
KrungThai Bank, Rojana Branch 253 Moo 5, Rojana Road, Phai Ling, Phra Nakhon Si Ayutthaya, Phra Nakhonsi Ayutthaya, 13000 Telephone: 035‐242‐477 Fax: 035‐242‐476
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd., Klong Toey Nua Subdistrict , Wattana District , Bangkok 10110 Telephone: 083‐490‐2871
River Hotel (Building 3rd),1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
KrungThai Bank, Hayaek Phokhun Mengrai Branch 116/19 Moo 19, Highway 110 Road, Rop Wiang, Mueang Chiang Rai, Chiang Rai, 57000 Telephone: 053‐715‐067 Fax: 053‐715‐068
Outperform (17E TP Bt83.00)
Earnings Review
Close Bt72.00
Petrochemicals May 12, 2017
Beat forecast/ Below forecast / In line
Starts the year with soaring 1Q17 earnings Results date: May 11, 2017 Price Performance (%)
LT growth platform intact Given the company’s continuing earnings acceleration in 2017E, along with its position as the group’s petrochemical flagship with a fully‐ broadened product chain, especially after the cluster of asset injections from PTT (expected to be completed in 4Q17E) and its organic growth from new project expansion, we maintain our Outperform rating. Soaring 1Q17 NP of Bt13.2bn, beating the street forecast
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
6.662
7.214
KT ZMICO vs. consensus Share data
7.0%
6.5%
Reuters / Bloomberg
PTTGC.BK/PTTGC TB
Paid‐up Shares (m)
4,508.85
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
325.00/9,345.00
Foreign limit / actual (%)
37.00/20.81
52 week High / Low (Bt)
76.00/53.25
Avg. daily T/O (shares 000)
11,192.00
NVDR (%)
11.81
Estimated free float (%)
50
Beta
1.06
URL
www.pttgcgroup.com
CGR
Anti‐corruption
Level 4 (Certified)
Patcharin Karsemarnuntana Analyst, no 17834 [email protected] 66 (0) 2695‐5837
PTTGC delivered soaring NP of Bt13.2bn in 1Q17 (+180% YoY, +35% QoQ), ahead of our forecast and the street forecast by 10%/13%, with the higher‐than‐expected adjusted EBITDA margin of olefins and derivatives business as the main deviation (35% vs. our forecast of 32%). Meanwhile, its core profit stood high at Bt12.5bn (+212% YoY, +13.5% QoQ), with aromatics and olefins as the main catalysts following their positive price effect, particularly in the case of BZ, butadiene, MEG and polyethylene prices (see figures 2,3), which helped offset the lower U‐rate of the olefins fleet to 95% (vs. 100% in 4Q16) given the planned shutdowns of Oleflex and MEG, as well as the lower U‐rate of the aromatics units to 78% (vs. 90% in 1Q16, and 82% in 4Q16) given the shutdown of some small units. At the same time, there was less momentum on its refinery’s performance in 1Q17, particularly QoQ, with a sustained high U‐rate at 102% (103% in 4Q16) and a firm accounting GRM of US$6.76/bbl (vs. US$6.7/bbl in 4Q16), with weakening market GRM offset by lower stock impact and hedging impact. Earnings estimates maintained Given that the 1Q17 core earnings represent 39% of our full‐year forecast to be followed by fading earnings momentum in 2Q17E with an expected back‐to‐normal price level of BZ and butadiene (vs. the abnormal high in 1Q17 due to tight supply from firm demand and the plant turnaround/disrupted harvesting yield of natural rubber) along with the company’s planned shutdown of its Olefin #2/1 (39 days in May‐ Jun) and Aromatics #2 (45 days in Jun‐Jul) as the main weakness, we maintain our core profit of Bt32.2bn in 2017E. Meanwhile, the first contribution of the asset injection from PTT is expected in 4Q17E as scheduled, which will be a source of upside risk to our 2017E earnings by 2% (note that we put its first full‐year contribution starting from 2018E onwards). Financials and Valuation FY Ended 31 Dec Revenues (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 (%)
2015 403,440 20,502 4.55 33.52 2.80 51.35 2015 15.82 9.06 1.40 3.9% 9.0% 25.1%
2016 349,101 25,602 5.74 26.15 2.85 54.56 2016 12.54 7.86 1.32 4.0% 10.7% 20.7%
2017E 442,341 32,156 7.13 24.19 3.56 59.21 2017E 10.10 6.36 1.22 5.0% 12.5% 16.6%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2018E 472,181 34,656 7.68 7.78 3.84 63.33 2018E 9.37 6.00 1.14 5.3% 12.5% 7.7%
2019E 470,053 34,798 7.71 0.41 3.86 67.21 2019E 9.33 5.55 1.07 5.4% 11.8% ‐1.6%
Figure 1: PTTGC’s 1Q17 earnings review Profit and Loss (Btmn) Year‐end 31 Dec Revenue Gross profit EBITDA Interest expense Other income Income tax Forex gain (loss) Other extraordinary Items Gn (Ls) from affiliates Minority interests Net profit (loss) Core profit (loss) Reported EPS (Bt) Gross margin (%) EBITDA margin (%) Net margin (%) Current ratio (x) Interest coverage (x) Interest‐bearing debt / equity (x) BVPS (Bt) ROE (%)
1Q16 81,473 7,618 9,189 (1,090) 521 (623) 691 ‐ 178 (32) 4,707 4,016 1.06 9.4 11.3 5.8 2.8 4.6 0.5 52.2 8.1
4Q16 110,689 16,932 17,936 (1,030) (360) (1,001) (638) (656) 217 (185) 9,744 11,038 2.18 15.3 16.2 8.8 2.4 13.0 0.4 54.6 16.2
1Q17 108,042 16,297 18,348 (1,001) 1,314 (1,597) 654 ‐ 538 (68) 13,182 12,527 2.96 15.1 17.0 12.2 2.6 13.3 0.4 57.4 20.9
% YoY 32.6 113.9 99.7 (8.2) 152.0 156.3 (5.3) nm 201.6 114.5 180.0 211.9 179.2
% QoQ (2.4) (3.7) 2.3 (2.8) nm 59.6 nm (100.0) 147.4 (63.1) 35.3 13.5 35.8
2016 349,101 42,038 47,752 (4,220) 1,286 (3,025) 275 499 617 (278) 25,602 24,827 5.74 12.0 13.7 7.3 2.4 7.2 0.4 54.6 10.7
2017 442,341 49,483 56,756 (3,228) 1,700 (5,129) ‐ ‐ 936 (300) 32,156 32,156 7.13 11.2 12.8 7.3 2.0 11.8 0.3 59.2 12.5
% YoY 26.7 17.7 18.9 (23.5) 32.2 69.6 (100.0) (100.0) 51.6 7.8 25.6 29.5 24.2
YTD (% of 17E) 24% 33% 32% 31% 77% 31% nm nm 57% 23% 41% 39% 42%
Source: KT ZMICO Research
Figure 2: Price and spread movement ‐ olefins and polymer chain Unit: US$/ton
PTTGC – related products and spread Derivatives
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 Apr % YoY % QoQ
Spread
Naphtha MOPJ
Ethylene SEA
Propylene SEA
HDPE SEA
LLDPE SEA
LDPE SEA
MEG SEA
Butadiene SEA
961 858 920 946 935 951 913 647 494 563 461 445 344 411 389 450 499 487 45.1 10.9
1,395 1,265 1,322 1,427 1,441 1,447 1,478 1,214 1,026 1,386 970 1,033 1,012 1,099 1,057 978 1,090 1,058 7.7 11.5
1,306 1,297 1,336 1,366 1,369 1,279 1,301 1,032 833 940 736 587 649 719 728 722 933 760 43.8 29.2
1,482 1,443 1,489 1,536 1,554 1,569 1,604 1,448 1,188 1,375 1,234 1,153 1,103 1,153 1,139 1,134 1,176 1,170 6.6 3.7
1,477 1,433 1,490 1,549 1,560 1,578 1,601 1,431 1,181 1,375 1,224 1,158 1,114 1,181 1,193 1,191 1,215 1,200 9.1 2.0
1,459 1,444 1,569 1,664 1,639 1,605 1,601 1,440 1,192 1,401 1,244 1,158 1,117 1,183 1,195 1,233 1,330 1,313 19.1 7.9
1,282 1,173 1,143 1,208 1,182 1,093 1,143 1,035 903 1,027 1,025 837 732 820 762 818 1,078 1,013 47.3 31.8
1,731 1,344 1,129 1,524 1,348 1,289 1,448 1,024 710 1,100 972 702 864 990 1,069 1,583 2,545 1,300 194.6 60.8
Ethylene - MOPJ
Propylene - MOPJ
HDPE - MOPJ
LLDPE - MOPJ
LDPE - MOPJ
MEG (0.65 Ethylene)
434 407 402 481 507 496 565 567 532 823 509 588 668 688 668 528 591 571 (11.5) 11.9
345 439 416 420 434 328 388 385 339 377 275 142 305 308 339 272 434 273 42.3 59.6
521 585 569 590 620 618 691 802 694 812 774 708 759 742 749 684 677 683 (10.8) (1.0)
515 575 570 603 625 627 688 785 687 811 763 713 770 770 804 741 717 713 (6.9) (3.2)
498 586 649 718 705 653 688 793 698 837 783 713 773 773 806 783 831 825 7.5 6.1
375 351 284 281 245 152 182 246 236 126 394 166 74 105 75 182 370 325 398.0 102.7
Source: PTTGC, KT ZMICO Research
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Figure 3: Price and spread movement – aromatics chain Unit : US$/ton
PTTGC – related products and spreads
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 Apr % YoY % QoQ
PX Spot Taiwan 1,635 1,443 1,485 1,432 1,284 1,259 1,346 999 827 935 820 793 750 805 806 815 889 855 18.5 9.1
PX FECP 1,618 1,409 1,440 1,440 1,303 1,256 1,350 1,035 785 924 823 786 718 799 789 790 885 905 23.3 12.0
BZ Spot Korea 1,379 1,286 1,258 1,283 1,297 1,293 1,301 954 670 804 661 606 574 628 640 720 923 838 60.8 28.2
Condensate Erawan 948 870 929 937 917 922 872 634 453 533 427 375 303 394 386 432 465 465 53.5 7.6
PX Spot Taiwan ‐ Condensate 687 572 556 494 367 337 474 365 374 403 394 417 448 411 420 383 425 390 (5.1) 11.0
PX FECP ‐ Condensate 670 539 511 502 386 334 479 401 333 391 397 410 415 405 402 358 420 440 1.2 17.3
BZ Spot‐ Condensate 431 416 329 346 380 370 430 320 217 271 235 230 272 234 253 288 458 373 68.4 59.0
Source: PTTGC, KT ZMICO Research
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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, M‐CHAI, POMPUI, TFD, TTL, NMG.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Satisfactory (scores: 60 – 69) Very Good (scores: 80 – 89) Pass (scores: 50 – 59) Good (scores: 70 – 79) 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
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KT ZMICO Securities Company Limited Head Office
WWW.KTZMICO.COM
8th, 15th‐17th,19th, 21st Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok, Thailand 10500 Telephone: (66‐2) 695‐5000 Fax: (66‐2) 695‐5173 KT ZMICO Connect 662 695 5555
Central World Branch
Amarin Branch
22nd Floor, Amarin Building, 496‐502 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 018‐6200 Fax: (66‐2) 018‐6298, (66‐2) 018‐6299
8th Floor, Ton Son Tower, 900 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 626‐6000 Fax: (66‐2) 626‐6111
Phaholyothin Branch
Sindhorn Branch
Viphavadee Branch
2nd Floor, Sindhorn Tower 1, 130‐132 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 627‐3550 Fax: (66‐2) 627‐3582, 627‐3600
G Floor, Lao Peng Nguan 1 Bldg., 333 Soi Cheypuand, Viphavadee‐Rangsit Road, Ladyao, Jatujak, Bangkok 10900 Telephone: (66‐2) 013‐8600 Fax: (66‐2) 618‐8569
BangKhae Branch
Chiang Mai Branch
Pak Chong Branch
999/9 The Offices at Central World, 16th Fl., Rama 1 Rd, Pathumwan, Bangkok 10330 Telephone: (66‐2) 264‐5888 Fax: (66‐2) 264 5899
1291/1, Shinnawatra Tower II, 3rd Floor, Phaholyothin Road, Phayathai, Bangkok 10400 Telephone: (66‐2) 686‐1500 Fax: (66‐2) 686‐1666
Ploenchit Branch
518 The Mall Group Building Bangkhae Branch, 6th Floor, Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Telephone: (66‐2) 454‐9979 Fax: (66‐2) 454‐9970
422/49 Changklan Road, Changklan Subdistrict, Amphoe Meuang, Chiang Mai 50100 Telephone: (053) 270‐072 Fax: (053) 272‐618
173 175, Mittapap Road, Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Telephone: (044) 279‐511 Fax: (044) 279‐574
Korat Branch
Khon Kaen Branch
Chonburi Branch
624/9 Changphuek Road, T.Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171
5th Floor, Charoen Thani Princess Hotel, 260 Srichan Road, T. Naimuang, A. Muang, Khon Kaen 40000 Telephone: (043) 389‐171‐193 Fax: (043) 389‐209
4th Floor, Forum Plaza Bldg., 870/52 Sukhumvit Road, T. Bangplasoy, A. Muang, Cholburi 20000 Telephone: (038) 287‐635 Fax: (038) 287‐637
Pattaya Branch
Chachoengsao Branch
Hat Yai Branch
Easy Point 2, 392/65 Moo.9, T.Nong Prue, A. Bang Lamung, Chonburi 20260 Telephone: (038) 420‐965 Fax: (038) 420‐968
108/34‐36 Mahajakkrapad Road, T.Namuang, A.Muang, Chachoengsao 24000 Telephone: (038) 813‐088 Fax: (038) 813‐099
200/301, 200/303 JULDIS HATYAI PLAZA Floor 3 , Niphat‐Uthit 3 Rd, Hatyai Songkhla 90110 Telephone: (074) 355530‐3 Fax: (074) 355534
Phuket Branch
22/61‐63, Luang Por Wat Chalong Road, Talat Yai, Mueang Phuket, Phuket 83000 Telephone: (076) 222‐811, (076) 222‐683 Fax: (076) 222‐861
Phitsanulok Branch
227/171 Borom Trilokkanat Road, Muang, Phitsanulok 65000 Telephone: 055‐219‐255 to 8 Fax: 055‐219‐259
Nakhon Pathom
Cyber Branch Ayutthaya
Cyber Branch @ North Nana
Cyber Branch Chiangrai
KrungThai Bank, Rojana Branch 253 Moo 5, Rojana Road, Phai Ling, Phra Nakhon Si Ayutthaya, Phra Nakhonsi Ayutthaya, 13000 Telephone: 035‐242‐477 Fax: 035‐242‐476
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd., Klong Toey Nua Subdistrict , Wattana District , Bangkok 10110 Telephone: 083‐490‐2871
River Hotel (Building 3rd),1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
KrungThai Bank, Hayaek Phokhun Mengrai Branch 116/19 Moo 19, Highway 110 Road, Rop Wiang, Mueang Chiang Rai, Chiang Rai, 57000 Telephone: 053‐715‐067 Fax: 053‐715‐068
