Head of Research, Krungthai XSpring

Waraporn Wiboonkanarak

Head of Research

A full service Thai brokerage

Krungthai XSpring

Krungthai XSpring is a full service broker. The company provides a wide range of investment services such as Securities Brokerage, Derivative Agent Business, Securities Borrowing and Lending, Securities Trading, Underwriting, Financial Advisory, Wealth Advisory, Private Fund Management and International Markets Securities Trading. 

In terms of credibility, Fitch Ratings has assigned Krunghtai XSpring a long-term rating of AA- and a national short-term rating of F1+ with stable outlook.

Thematic (Sector/Industry)

<ul><li>We maintain a Neutral rating on the energy sector due to external factors, including Trump 2.0 policies, the US-China trade war, and risks from domestic government policies related to energy pricing that may pose downside risk to the 2025-26E earnings forecasts.</li><li>However, downside risks for SET ENERGY appear more limited as the implied EPS has declined near its average level, indicating that market expectations for EPS have adjusted closer to the consensus.</li><li>We reiterate our preference for downstream over upstream players and favor refiners over oil retailers. </li></ul>

We maintain a Neutral rating on the energy sector due to external factors, including Trump 2.0 policies, the US-China trade war, and risks from domestic government policies related to energy pricing that may pose downside risk to the 2025-26E earnings forecasts.However, downside risks for SET ENERGY appear more limited as the implied EPS has declined near its average level, indicating that market expectations for EPS have adjusted closer to the consensus.We reiterate our preference for downstream over upstream players and favor refiners over oil retailers. 

Energy (Upstream-Downstream) - DECEMBER 17, 2024

Equity Bottom-Up

PTT Oil & Retail Business  / Equity Bottom-Up

<ul><li>The 3Q24 earnings turned to a net loss, pressured by oil stock losses, forex losses, and seasonal factors.</li><li>We maintain our 2024-26E earnings forecasts, expecting a QoQ recovery in 4Q24E and strong core profit growth at a 28% CAGR in 2025- 26E, driven by a low base effect in 2024E and divestment of unprofitable businesses (Texas Chicken, Kouen).</li><li>The stock price has largely priced in the negative factors and implies upside gain of approximately 13% from the fair value (FV) of Bt17.0.</li></ul>

The 3Q24 earnings turned to a net loss, pressured by oil stock losses, forex losses, and seasonal factors.We maintain our 2024-26E earnings forecasts, expecting a QoQ recovery in 4Q24E and strong core profit growth at a 28% CAGR in 2025- 26E, driven by a low base effect in 2024E and divestment of unprofitable businesses (Texas Chicken, Kouen).The stock price has largely priced in the negative factors and implies upside gain of approximately 13% from the fair value (FV) of Bt17.0.

Ptt Oil and Retail Business - Larger-Than-Expected Net Loss Due to Seasonal and Specific Factors

<ul><li>We have revised down our Dubai crude oil price assumptions for 2024-26E to USD80, USD75, and USD73/bbl, respectively.</li><li>The downward trend in oil prices due to global risks (e.g., increased supply and slower demand amid the unrest in the Middle East) is expected to negatively impact PTTEP, as approximately 30% of its sales volume is exposed to crude oil prices, and the stock shows a high correlation of around 0.8 with crude oil prices.</li><li>For the refinery sector, we anticipate short-term negative effects, likely due to inventory losses in 3Q24E from the sharp decline in crude oil prices, against a neutral impact in the medium term given declining crude oil costs and crude premiums. </li></ul>

We have revised down our Dubai crude oil price assumptions for 2024-26E to USD80, USD75, and USD73/bbl, respectively.The downward trend in oil prices due to global risks (e.g., increased supply and slower demand amid the unrest in the Middle East) is expected to negatively impact PTTEP, as approximately 30% of its sales volume is exposed to crude oil prices, and the stock shows a high correlation of around 0.8 with crude oil prices.For the refinery sector, we anticipate short-term negative effects, likely due to inventory losses in 3Q24E from the sharp decline in crude oil prices, against a neutral impact in the medium term given declining crude oil costs and crude premiums. 

Industry Update: Energy (Oil) - SEPTEMBER 30, 2024

<ul>
<li>We expect the energy sector to deliver a mixed performance in 3Q24E.</li>
<li>We maintain a Neutral investment rating on the sector, reflecting weak industry indicators in 2H24E (e.g., oil prices, refining margins, marketing margins).</li>
<li>In addition, we downgrade our recommendation for refinery stocks (BCP and TOP) to Outperform (from Buy) due to tactical factors, as their share prices have risen in line with improving refining margins. </li>
</ul>


We expect the energy sector to deliver a mixed performance in 3Q24E.
We maintain a Neutral investment rating on the sector, reflecting weak industry indicators in 2H24E (e.g., oil prices, refining margins, marketing margins).
In addition, we downgrade our recommendation for refinery stocks (BCP and TOP) to Outperform (from Buy) due to tactical factors, as their share prices have risen in line with improving refining margins. 


Industry Update - Energy (Upstream-Downstream)

<ul><li>The 2Q24 earnings weakened as expected, pressured mainly by the mobility business.</li><li>The 2H24E earnings are likely to continue to be pressured by the mobility business (with both challenging sales volume and GP/liter) .</li><li>Conversely, the lifestyle and global businesses will grow strongly in the period. </li></ul>

The 2Q24 earnings weakened as expected, pressured mainly by the mobility business.The 2H24E earnings are likely to continue to be pressured by the mobility business (with both challenging sales volume and GP/liter) .Conversely, the lifestyle and global businesses will grow strongly in the period. 

OR TB -Weak 2Q24 Earnings as Expected, Weighed Down by Mobility Business

Thailand

PTT Oil and Retail Business Public Company Limited distributes petroleum products. The Company offers oil, gas, fuels, LPG, lubricants, and other related items. PTT Oil and Retail Business serves customers in Thailand.

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PTT Oil & Retail Business (OR TB)

Energy (Upstream-Downstream) - DECEMBER 17, 2024

We reiterate our preference for downstream over upstream players and favor refiners over oil retailers. Our top pick remains BCP (Outperform; FV at...

Krungthai XSpring

Ptt Oil and Retail Business - Larger-Than-Expected Net Loss Due to Seasonal and Specific Factors

We maintain our 2024-26E earnings forecasts, expecting a QoQ recovery in 4Q24E and strong core profit growth at a 28% CAGR in 2025- 26E, driven by...

Krungthai XSpring

Industry Update: Energy (Oil) - SEPTEMBER 30, 2024

The downward trend in oil prices due to global risks (e.g., increased supply and slower demand amid the unrest in the Middle East) is expected to...

Krungthai XSpring

Industry Update - Energy (Upstream-Downstream)

We maintain a Neutral investment rating on the sector, reflecting weak industry indicators in 2H24E (e.g., oil prices, refining margins, marketing...

Krungthai XSpring

OR TB -Weak 2Q24 Earnings as Expected, Weighed Down by Mobility Business

The 2H24E earnings are likely to continue to be pressured by the mobility business (with both challenging sales volume and GP/liter) .

Krungthai XSpring

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