Equity Analysis /
Thailand

Thai Oil PCL: More than a margin game

  • Fatter GRM to boost strong 4Q22 core earnings expansion

  • Clean Fuel Project (CFP) and CAP…long-term value enhancement

  • Not only margin but also capacity expansion…earnings growth drivers

Suppata Srisuk
Suppata Srisuk

Equity Research Analyst

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Bualuang Securities
2 December 2022

The improving short-term outlook together with value accretion from investments in CFP and CAP projects are poised to enhance TOP’s earnings growth profile. The current valuation is attractive—a YE23 PBV of only 0.8x (1.2SD below its long-term mean of 1.4x).

Fatter GRM to boost strong 4Q22 core earnings expansion   

Demand for diesel, high-sulphur fuel oil, and jet fuel is set to rise QoQ in 4Q22, boosted by high seasonal demand (winter season), gas-to-oil demand switching (due to high gas prices), and the easing of travel restrictions across many jurisdictions. From the supply perspective, the possibility of lower supply from Russia (tied to the EU ban) and exceptionally low inventories of diesel globally will be the factors limiting supply availability, contributing to the GRM in 4Q22.