PTT Plc - 3Q14 profit to drop 27.7%qoq pchome from weak refinery pchome business PTT s 3Q14 net prof

PTT Plc - 3Q14 profit to drop 27.7%qoq pchome from weak refinery pchome business PTT s 3Q14 net profit is estimated at B22bn, dropping 27.7%qoq. Stock loss from refineries (TOP, PTTGC, IRPC, SPRC, and BCP) is projected at B4- 5/barrel because Dubai crude oil price has dropped by over US$10/barrel at end-3Q14, while PTTEP s 3Q14 net profit is reported at B15.3bn, dropping 16.0%qoq. Overall, 9M14 net profit is estimated at B79bn, pchome rising 1.9%yoy, making up 81% of FY2014 earnings forecast. - Maintain FY2014-2015 earnings forecast We maintain FY2014-2015 earnings forecast under the global oil price assumption of US$100/barrel pchome in 2014 and US$90/barrel in 2015. Although FY2015 global oil price assumption decreases, PTT s net profit is estimated to grow by 5.1%yoy pchome in 2015 after increasing by 4.6%yoy in 2014 thanks to higher sales volume from every business. PTT s GSP#5 and TOP s refinery will be working at their full capacity for a full year in 2015 after a maintenance shutdown in 2014, and PTTEP would recognize pchome income from Zawtika project for a full year in 2015. In addition, as NGV price is raised by B1/kg to B11.50/kg (effective from October 1, 2014 on), loss from NGV sales is projected to drop by B4bn/year. - BUY We derive PTT s fair value (DCF) at B354 in 2014 and B405 in 2015. Though FY2014 fair value implies a limited upside, the current share price still has 10.1% upside from FY2015 fair value. Also, dividend yield can be expected at 4%p.a. We reiterate BUY.
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