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Indorama Ventures PCL: Modest NPAT beat; strong core profit growth expected for 2Q21

  • Bottom-line was a bit above estimate
  • IVL reported a 1Q21 net profit of Bt6,009m
  • The second-quarter is normally the seasonal peak for PET demand

Hefty core profit expansion through 2Q21 and for 2021 as a whole will prompt the market to bid up the stock going forward, we believe. Furthermore, it is now high season for PET demand, so the chances are good that IVL will re-rate toward its typical high season multiple. Historical data show that the stock generally re-rates to about its long-term mean PBV (1.9x) during the second-quarter seasonal peak, which implies a price of Bt48. If the market were to re-rate IVL to its 3Q18 level (when the PET [West] spread was close to the current spread)—a PBV of 2.3x—its stock price would be Bt59.

Bottom-line was a bit above estimate

IVL reported a 1Q21 net profit of Bt6,009m, up by 953% YoY and 358% QoQ. Stripping out a Bt4,273m gain on inventories, a Bt218m insurance payout, a Bt4m gain on the disposal of assets, and a Bt4m FX loss, core earnings would be Bt2,576m, up by 42% YoY and 198% QoQ. While the core profit was in line with our estimate, the bottom-line was 6% above our expectation, due to bigger extra gains than assumed (it was in line with the consensus).


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