The disappointing 3Q22 result may generate negative sentiment toward the share price in the short-term. Also, the 2022 core earnings outlook is uninspiring, hence we see no obvious catalyst for the share price. Nevertheless, its cheap valuation—trades at a YE23 PBV of only 0.6x (2SD below its long-term mean of 1.1x)—should limit the downside risk of the share price. Over the long-run, the acquisition of Allnex will be PTTGC’s first step to transforming its portfolio into expanded specialty niches, enhancing its profitability and long-term earnings profile. Our HOLD rating stands.
PTTGC posted a 3Q22 net loss of Bt13,384m, a reversal from net profits in 3Q21 and 2Q22. Stripping out extra items (mainly losses on inventories, FX and commodity hedging), core earnings would be Bt2,807m, down 73% YoY and 82% QoQ. The net loss was much deeper than our estimate (and that of the consensus), due to bigger extra losses than expected.