Equity Analysis /

Thailand: Energy - Robust YoY core earnings expansion expected through 3Q22

  • Robust aggregate core earnings growth expected for 2Q22

  • 3Q22 core profit to expand further YoY, but to soften QoQ

  • Extraordinary high GRM prompted earnings upgrade

Suppata Srisuk
Suppata Srisuk

Equity Research Analyst

Bualuang Securities
1 August 2022

The core earnings of our Energy coverage look set to expand YoY throughout 3Q22, buoyed by demand improvement coupled with supply tightness. However, the global economic slowdown is the key factor to watch as it may derail global demand recovery and put downward pressure on the energy prices, margins, and thus earnings QoQ in 3Q22.  The current valuations of Energy stocks still offer decent bargains. PTTEP remains our preferred pick.

Robust aggregate core earnings growth expected for 2Q22  

We expect the eight Energy names we cover to post an aggregate 2Q22 net profit of Bt109bn, up 139% YoY and 59% QoQ, with core earnings of Bt120bn, up by 183% YoY and 64% QoQ. Enhanced extra gains and better operational performance were the drivers of the modeled aggregate net profit growth. Among our Energy coverage, we expect all firms to post robust YoY core earnings expansion, boosted by broad demand growth and fatter margins. Refining firms look set to deliver the strongest YoY core profit growth (fatter GRMs), followed by BANPU (higher earnings from the coal and gas bizes), PTTEP (greater petroleum sales volume and higher ASP), and OR (bigger profits across all businesses).