Equity Analysis /

Thailand: Chemical - 3Q22 preview—GGC and IVL to standout

  • Aggregate core earnings contraction expected for 3Q22

  • 4Q22 aggregate core profit to soften further, led south by PTTGC

  • More optimistic on 2H22 outlook prompted earnings upgrade

Suppata Srisuk
Suppata Srisuk

Equity Research Analyst

Bualuang Securities
19 October 2022

The aggregate 3Q22 core earnings of our Chemical coverage look set to fall YoY and QoQ, led south by PTTGC. GGC and IVL are the likely standouts in posting YoY core profit expansions. IVL remains our preferred pick; upgraded GGC to TRADING BUY.

Aggregate core earnings contraction expected for 3Q22 

We expect the three Chemical names we cover to post an aggregate 3Q22 core earnings of Bt12,186m, down 28% YoY and 58% QoQ, with net loss of Bt1,525m, a reversal from net profit posted for 3Q21 and 2Q22. Bigger extra losses (mainly inventory loss and loss on oil hedging) and weaker operational performance were the key factors behind the modeled aggregate net loss. Among our Chemical coverage, we expect GGC and IVL to post the YoY core earnings expansion. A higher FA biz profit would be a key driver for GGC’s YoY core profit growth. Meanwhile, the enhanced sales volumes, fatter product spreads, and a contribution by Oxiteno would be the drivers for IVL.