An improving core operation and IRPC’s cheap valuation—a YE21 PBV of only 0.7x (1.6SD below its long-term mean of 1.4x)—should support the stock price. However, the frim’s high operational costs may limit its scope for earnings bounce somewhat. Within Refinery space, we prefer TOP, as its earnings profile is relatively more leveraged to a rebounding GRM, due to its much lower OPEX/barrel ratio.
Deeper net loss than modeled; core loss in line with expectation
IRPC posted a 2Q20 net loss of Bt489m, a YoY reversal but shallower QoQ. Stripping out extra items, the core loss would be Bt663m, shallower YoY and QoQ. While the core loss was in line with our estimate, the net loss was deeper than expected, due to bigger extra losses than assumed (it was in line with the consensus).