Expectations of enhanced YoY core earnings growth in 3Q22, the substantial core operational improvement this year, underpinned by GRM expansion, and a good dividend yield should support the share price going forward. SPRC’s current valuation is still undemanding—a YE22 PBV of 1.2x (0.7SD below its long-term average) and 2022 dividend yield of 20.4% (against 3.0% for the SET) which should provide a buffer against the risk of price slippage. As the gasoline peak season is winding down (SPRC is the best fit for this theme), we don’t see the near-term catalyst for the share price, hence we have downgraded our rating from TRADING BUY to HOLD.
In line with estimates
SPRC reported a 2Q22 net profit of Bt7,156m, up 9-fold YoY and 35% QoQ. Stripping out a Bt1,967m inventory gain, a Bt302m FX loss, and a Bt337m loss on derivatives, the core profit would be Bt6,161m, a YoY turnaround and up 184% QoQ. The result was in line with our estimate and that of the consensus. SPRC announced 1H22 DPS of Bt0.96, implying a simple yield of 8.5% (XD: 24 Aug, payment: 8 Sep).