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PTT
CIMB-GK Securities (Thailand) has upgraded its recommendation on PTT stock to "outperform", with a target price of Bt285.
PTT's gas sales should increase in the next few years following the launch of its third gas pipeline in the first quarter and the start of production at its Arthit project next February. The company has maintained its growth forecast for natural gas consumption at an 11-per-cent compound annual rate for 2006 to 2011. The strong demand will be supported by new gas-fired power projects and higher demand from PTT's gas separation plants, both existing and new ones. Under the national Power Development Plan 2007, Thailand will need about 31,790 megawatts of new power-generating capacity. About 57 per cent will be allocated to gas-fired plants, 9 per cent to coal plants and 13 per cent to nuclear plants. However, there is a good chance that new coal and nuclear plants will not materialise, given the strong public protests about pollution and safety issues. The outlook for PTT's refinery and petrochemical operations in the second and third quarters this year remains strong due to strong product prices and high margins. Current gross refining margin is above US$10 (Bt346) per barrel and it will possibly be higher than assumptions if it does not fall significantly in the second half, as happened last year. PTT also expects petrochemical prices, especially for olefins and aromatic products, to stay high for another few years due to a potential delay of petrochemical projects in the Middle East and stronger-than-expected demand from China.
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