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Aromatics (Thailand)
CIMB-GK Securities (Thailand) has maintained its "outperform" rating for shares of Aromatics (Thailand), or ATC, with a target price of Bt65 apiece.
ATC is expected to post another good quarter on higher sales volume and product-to-feed margins. Despite a sharp rise in the price of condensate feedstock, ATC's product-to-feed margins should be higher quarter on quarter, thanks to strong margins for benzene and by-products.The outlook for the third quarter is even more encouraging, as aromatics products enter their peak demand season prior to Christmas and New Year's. Product prices are likely to move higher, especially for paraxylene, which is the maim feedstock for producing polyester. ATC's management expects benefits from the company's merger with Rayong Refinery, especially in regard to expansion and upgrading of products with low investment costs. The company plans to announce these projects to shareholders for approval before the merger. The securities firm has maintained its "outperform" rating for ATC on the back of strong earnings growth expected for this year. Although sticking to its earnings-per-share forecasts, there is a good chance of an earnings upgrade in the near term, the brokerage says. An earnings upside could come from sustainable high margins and a successful merger with Rayong Refinery.
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