Equity Analysis /

Thailand: Chemical -4Q22 to be a weak quarter; QoQ improvement expected for 1Q23

  • 4Q22 aggregate core earnings to subside

  • QoQ aggregate core profit expansion expected for 1Q23

  • Better prospects to trigger share price re-rating

Suppata Srisuk
Suppata Srisuk

Equity Research Analyst

Bualuang Securities
19 January 2023

The aggregate 4Q22 core earnings of our Chemical coverage look set to decline YoY and QoQ. But the 1Q23 outlook is improving, underpinned by China’s reopening. IVL remains our preferred pick, while we upgraded PTTGC to BUY.

4Q22 aggregate core earnings to subside 

We expect the three Chemical names we cover—GGC, IVL, and PTTGC—to post aggregate 4Q22 core earnings of Bt7,273m, down 17% YoY and 46% QoQ, with a net aggregate profit of Bt6,001m, down 30% YoY but a reversal from the net loss they posted for 3Q22. While the weaker operational performance was the key factor behind the modeled aggregate core earnings contraction, expected extra gains (mainly gains on FX and oil hedging) would be the key drivers for the QoQ bottom-line improvement. All three firms are poised to post the YoY core earnings slippage, led by GGC. Weaker ME and FA biz profits and the lower glycerine price (a by-product) would be the key factors pressuring GGC’s performance. IVL and PTTGC are also likely to report YoY core profit declines, due to lower sales volume (for PTTGC) and slimmer chemical spreads (for IVL and PTTGC).