Equity Analysis /
Thailand

Star Petroleum Refining PCL: Time to shine!

  • US summer driving season to kick off soon…

  • …gasoline crack spread looks set to rise further…

  • …SPRC stands out as a prime beneficiary

Suppata Srisuk
Suppata Srisuk

Equity Research Analyst

Bualuang Securities
26 May 2022

The peak gasoline consumption season is about to rev up. We believe a window has opened to play the “peak gasoline season” theme. SPRC is the best fit for the play, as it has the best gasoline-optimized output slate among Thai refineries. We expect the share price to re-rate to a high season metric—a PBV of 1.6x. We reiterate our TRADING BUY call.

US summer driving season to kick off soon…

Time flies during reopening and now it is already near the end of the fifth month for 2022. Next Monday (May 30, the last Monday in May) will be the beginning of the US summer driving season which normally starts on the Memorial Day and ends on the Labor Day (Sep 5, the first Monday in Sep). The gasoline consumption in the US typically increases MoM during May through Jul/Aug (but varies year by year). Historical data indicates that the US gasoline consumption rose MoM during May-Aug in 2017-2020 and it expanded MoM during May-Jul in 2021. EIA forecast that the US gasoline consumption will rise MoM from 9.1m bbl/day in May to 9.3m bbl/day in Jul this year (peaking this Jul).