Equity Analysis /

Indorama Ventures PCL: Hefty core earnings growth expected for 2Q22 & more to come

  • Robust core earnings growth expected for 2Q22

  • 3Q22 core profit to expand substantially YoY

  • Strong earnings momentum prompted projection upgrade

Suppata Srisuk
Suppata Srisuk

Equity Research Analyst

Bualuang Securities
20 July 2022

The substantial core earnings growth outlook for 3Q22 and throughout 2022 should continue to boost the share price going forward. The current valuation is still undemanding—trades at the YE22 PBV of only 1.3x (0.7SD below its long-term mean of 1.8x). Moreover, there’s scope for upside to our forecasts and valuation from new investments/acquisitions. BUY!

Robust core earnings growth expected for 2Q22

IVL looks set to continue delivering hefty core and net profit expansion in 2Q22. We expect the firm to post a net profit of Bt14,080m, up 69% YoY (flat QoQ) with core earnings of Bt10,762m, up 80% YoY and 4% QoQ. The key drivers for the core profit growth would be: 1) improved earnings at the Combined PET biz (greater sales volume, fatter YoY spot PET [West & Asia] spreads, and higher YoY contracted PET [West] spreads), 2) higher profit at the Integrated Oxide & Derivatives [IOD] business (increased sales volume, fatter MTBE spreads), and 3) contribution from Oxiteno (started consolidating this asset to its financial statement from 2Q22 onwards).