Equity Analysis /

Thailand: Energy - Expansive core earnings expected through 2Q22

  • Hefty aggregate core earnings growth expected for 1Q22

  • Further demand expansion to enlarge 2Q22 core profit

  • Attractive valuation with scope for earnings upside

Suppata Srisuk
Suppata Srisuk

Equity Research Analyst

Bualuang Securities
6 May 2022

The core earnings of our Energy coverage look set to rise YoY and QoQ throughout 2Q22, buoyed by demand expansion in the face of supply tightness. As global energy demand is heading toward the pre-COVID level, energy prices and margins stand to strengthen further. The current valuations of Energy stocks still offer decent bargains. PTTEP and TOP are still our preferred picks.

Hefty aggregate core earnings growth expected for 1Q22  

We expect the eight Energy names we cover to post an aggregate 1Q22 net profit of Bt74bn, up 18% YoY and 35% QoQ, with core earnings of Bt65bn, up by 117% YoY and 8% QoQ. Bigger extra gains and better operational performance were the drivers of the modeled aggregate net profit growth. Among our Energy coverage, we expect most of the stocks (excluding IRPC and OR) to post robust YoY core earnings expansion, boosted by broad demand growth and fatter margins. BANPU looks set to deliver the biggest YoY core operational improvement (higher earnings from the coal and gas bizes), followed by PTTEP (greater petroleum sales volume and higher ASP) and refining firms (fatter GRMs). IRPC looks set to post the biggest YoY core operational performance decline, squeezed by slimmer GIM.