As the price of crude oil slows down, stock gains may not be seen. Therefore, the profit momentum of the refinery business will decrease.
As for petrochemicals in the 3rd quarter of 2023, the spread is not good, but “PTTGC” and “IRPC” There is a refinery business. Therefore benefiting from the refinery’s business, but in the 4th quarter of 2023, the refinery does not support it. Petrochemicals do not have a significant recovery.
In terms of upstream energy, “PTTEP” Consider that the 4th quarter of 2023 is not outstanding. If we look at normal profits, we can only support QoQ. Sales volumes improve but compensate for higher production costs.
As for downstream businesses, such as gas stations “OR” In the 3rd quarter of 2023, it was considered very good because there was Stock Gain to help. In the 4th quarter of 2023, the volume was considered good. Entering the high season for domestic travel, but margins decreased because stock gains were not as large as in the previous quarter.
Power plant business “GPSC” Operating results in the 4th quarter of 2023 decreased QoQ due to seasonal factors because entering the winter season, electricity use decreased, including the impact from the measure to reduce the electricity bill to 3.99 baht, which had an impact only in the 3rd quarter of 2023. 1 month only But it will have a full quarterly impact in the 4th quarter of 2023.
Even though the Energy Regulatory Commission recently announced an increase in the electricity price of 4.68 baht per unit, it is the lowest guideline that the Energy Regulatory Commission has proposed. We have to see how much the Ministry of Energy will set the electricity price. That means there is a month before it goes live. The numbers may be adjusted as well. However, the date and time of the announcement of electricity prices will be effective in the 1st quarter of 2024.
Overall, businesses under PTT, starting from the upstream business, are seen to be sustaining themselves. Midstream businesses such as refineries and petrochemicals should decrease QoQ. Downstream businesses, such as OR, will decrease. Electricity will also decrease. Therefore, the overall picture of the group in 4Q2023 is likely to decrease QoQ.
“All 7 PTT groups expect net profits in 2023 to be 207,000 million baht. In 2024, net profits are expected to be 224,000 million baht, an increase of 8% from the petrochemical business that has recovered. PTTGC, IRPC expect better profits. And GPSC’s electricity business has better profits. TOP, PTTEP’s profits are expected to be weaker. PTT’s profits are better because its own gas business should be better because gas costs are lower and losses from NGV are reduced. In summary, PTTGC, IRPC, GPSC is the hero”
Asked..how to set up the game to buy the PTT group?
Must say “PTT Group” Namely, the commodity group (Commodity), energy prices such as crude oil, gas, etc., refining margins in 2024 are not outstanding, the picture is slowing down from 2023.
Therefore, investment is considered “GPSC” Interesting because profits are growing Bond Yield is likely to pass its peak. The power plant group will also benefit. We recommend buying with a target price of 57 baht at the end of 2024, but with the current stock price rising quite a lot. May wait to summarize because 4Q23 and 1Q24 budgets are not outstanding.
Commodity groups choose “PTT” because the global economy next year is quite fragile. “PTT” is the most comprehensive energy stock. Earnings are quite efficient. In a situation where the market is fragile, PTT is considered the strongest stock. The financial position is good, D/E is not high, and the dividend is good, the yield is almost 6%. Personally, I think that with the outlook for 2024, it is fragile. PTT stocks look more defensive than others in the group.”
“PTTEP” and “TOP” can trade in cycles, while “IRPC” is not interesting and if compared to the “PTT group” it is seen that it is probably the slowest to recover. Even the main advantage is that it is inexpensive. But the business from petrochemicals Polypropylene (PP) straps and ABS plastic pellets are still oversupplied in the market. And next year there will be new production added. ABS will produce durable products such as car parts, electrical appliances, and electronic equipment. These products, during bad economic times, people will decide to buy slowly, which is the reason why IRPC is not interesting.
Next year will be the year of the PTT group.
Mr. Wisuwat Yakanawong, Director of Fundamental Analysis Department of Krungsri Securities, told “Post Today” that Overview “PTT Group” In 2024, there will still be many challenging factors, including oil prices and refining margins that will decrease as production capacity increases, as well as power plants facing pressure on Ft rates that the government has come to control.
by “PTT” In 2024, there will be quite a lot of pressure. Both the price of crude oil has decreased from 2023 and the Singapore GRM refining margin has decreased from the new refinery’s production capacity increasing to 1.8 million barrels per day. Which will come in a lot during the 2nd quarter of 2024. Next year’s refining margin will drop to 4.5-5 USD from this year’s 6.8 USD.
in addition “TOP” Next year, there will be an additional factor: the SBM2 oil buoy in the middle of the sea has an oil leak causing costs of approximately $0.5 per barrel. Affecting the operating profit margin (Operating Margin) in addition to the additional production capacity of the refinery.
“Petrochemical Business Group” In 2024, there will still be challenges. Especially for olefins, both HDPE and PP faced new production capacity that was somewhat higher than the demand, causing petrochemicals to spread year over year. 2024 is not very good. It is in the downcycle phase. As for the “aromatics” side, it may be slightly better.
The upstream energy side “PTTEP” In 2024, the volume should increase as the Erawan field increases its production capacity to 800 million cubic feet per day by April 2024. It will help that sales revenue should improve, but it is seen that the price of Dubai crude oil has decreased YoY. causing the selling price to decrease In addition, the Erawan pit price formula is a new price formula. with gas prices lower than the original contract As a result, the overall average selling price (Average Selling Price (ASP)) decreased even though the volume increased.
In another aspect of PTT, the gas separation plant should have a better burn rate (Run Rate) because the price of Erawan has increased, causing demand to serve the gas separation plant, resulting in a better production capacity (Utilization Rate), including Better margin
Electrical business at “GPSC” 2024 may face challenges. Even though gas prices have decreased compared to 2023, they still stand at a relatively high level of 370-380 baht per mmbtu and there are risk factors from government policy that may maintain the FT level at 20 satang in the January period. .-April 2024, thus causing the SPP group’s margin to remain low and not clearly recovering, which is still negative pressure for SPP.
So the big picture”PTT” Earning has both positive and negative results, so it may only be equal. As for “PTTEP” Volume should improve but the average price will fall. Earnings may not decrease much. Depending on the price of crude oil, the department expects it to fluctuate within the range of 75-85 USD per barrel. Meanwhile, the crude oil price trend in 2024, if it goes deeper, is expected to be at the level of 75-85 USD. But if there is a war, it is expected that the price of oil will be more than 90 USD, but it is seen that it is unlikely to exceed 100 USD because of inflation. ) also increased. Including next year, there is a possibility that the world economy will enter a recession (Resession), causing the prices of all products to collapse for sure. We recommend buying PTTEP with a target price at the end of 2024 at 190 baht.
“TOP” In 2024, refining margins are likely to remain poor YoY, with a unique positive factor being the “Clean Energy Project (CFP)” starting production in 2025, helping to increase production capacity. and the cost is competitive But in the short term, there is nothing exciting. This is because the refining margin decreased according to industry factors and pressure from oil factors.
“PTTGC” The refining margin is similar to TOP, but it is worrying that if the Chinese economy doesn’t recover, it will affect the petrochemical group. And olefins are probably still not good. As for whether it can be revived or not? It depends on the Chinese economy and the world market. If China doesn’t recover, petrochemical spreads won’t come back. We’ll probably have to wait a while. Recommend avoiding or play trading rounds But it is not recommended to hold long-term investments.
while IRPC Similar to PTTGC because it faces challenging factors on both the refinery side and the olefins that are still poor. Considered still tired, not very good
“GPSC” The power plant that is worth watching is the announcement of FT values. In mid-December 2023, it is expected to remain the same at 20 satang, not decreasing or increasing. Because the government is trying to reduce the cost of private sector production and help the public sector. As a result, short-term margins of the SSP group may still face pressure. Therefore, short-term trading is recommended. Waiting for the moment when the price of oil goes down As the bond decreases, you can speculate. But if the price of oil increases or the bond yield increases, it will put downward pressure on the GPSC share price.
part “OR” The department views that next year will be quite NEUTRAL. Businesses are still under pressure in terms of marketing fees as the government has issued regulations to control marketing fees. And expanding Café Amazon branches may not increase profits because the number of cups sold is quite saturated. Sales of Café Amazon at 90 million cups per quarter are quite tight. Increasing the margin level may require cost savings and adding new products, which may still take some time. Businesses that will replace oil sales are likely to have slower growth.
Even in the short term, the OR stock price that has increased may benefit from the establishment of an ESG fund because it has a AAA rating, which may help support fund flows. But the issue that is still challenging is tourists. China, which will enter next year, is still weak. Oil demand in the tourism sector may not clearly recover. The world economy may slow down. Domestic purchasing power that has not yet improved may not support OR’s operating performance much, so this price is not attractive.
And OR is still under pressure if the government sector will continue to maintain diesel prices. The position of the Oil Fund continues to become more negative. At present, the Oil Fund is negative at 77,000 – 78,000 million baht. If it continues to become negative, it may be another pressure for oil service providers who are being controlled by marketing fees. Overall, there are still policy risks for OR.
“This group that can be bought is PTTEP. With the price of branded oil at nearly 80 USD, we think it is unlikely to drop below this level. And if OPEC+ further reduces production capacity, it may cause stock prices to recover in the short term. It is probably the safest and has a high rate of return on dividends. Yield) is quite high, level 5%, quite reassuring. If you buy the parent PTT now at a price of 35 baht, you can only get a Dividend Yield of 3-4%, not very interesting when compared to PTTEP. Moreover, at the PTT price right now, you may not be able to expect profit from the price difference (Capital Gain).
The second most interesting stock is TOP. Even though next year’s refining margin is not good, we think that in the second half of 2024 People may start trading on factors that will benefit from the clean energy project (CFP) that will be completed, causing the cost of TOP to drop quite a lot, which is another interesting factor.”
stock price movement PTT Trading closed yesterday (1 Dec. 2023) at 35.25 baht, an increase of 0.50 baht, equivalent to +1.44%, trading value 2,183.36 million baht.
stock price PTTEP It was at 148.50 baht, a decrease of 3 baht, accounting for -1.98%, trading value 1,842.20 million baht.
stock price PTTGC At 38.50 baht, the closing price was unchanged. Trading value 245.21 million baht
stock price TOP It was at 51.25 baht, a decrease of 0.25 baht, accounting for -0.49%, trading value 150.94 million baht.
stock price IRPC It was at 1.99 baht, an increase of 0.01 baht, or +0.51%, trading value 56.72 million baht.
stock price OR was at 20.20 baht, an increase of 0.30 baht, accounting for +1.51%, trading value 191.69 million baht
stock price GPSC was at 46.75 baht, an increase of 1.25 baht or +2.75%, trading value 473.31 million baht
2023-12-02 11:11:00
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