• 
• 

Published on October 31, 2007

Aromatics (Thailand) said its unreviewed, consolidated third-quarter net profit slumped 36.3 per cent year on year, eroded mainly by a lower product-to-feed margin and the baht's appreciation.

Its net profit was Bt1.79 billion, down significantly from Bt2.82 billion in the same period last year, the company said in a filing with the Stock Exchange of Thailand.

Despite higher selling volume, its product-to-feed-margin declined and hurt earnings.

Its feed product rose from US$606 (Bt20,600) per tonne to $638, while its selling price fell from $786 a tonne to $784, resulting in the narrowed product-to-feed-margin, the company said.

Paraxylene prices dropped 14 per cent to $1,100 a tonne, while benzene fell 9 per cent to $988. Condensate feedstock prices jumped 5 per cent to $638. As a result, the product-to-feed-margin fell 19 per cent.

The baht, which appreciated from 37.54 to the US dollar at the end of September 2006 to 34.266 at the end of last month, also eroded the company's quarterly net profit.

Higher processing costs and selling and administrative expenses also had an impact on Aromatics' net profit, the company said.

The stock yesterday fell 0.91 per cent to close at Bt906.66.For the first nine months, however, the company's net profit rose to about Bt7.42 billion, from Bt4.25 billion in the same period last year.

Aromatics' net profit was slightly lower than the Bt1.86 billion forecast by Kim Eng Securities (Thailand).

The broker has maintained its "speculative buy" rating on the company's shares, with a fair value of Bt80 apiece, given the expected rebound in the paraxylene price and an amalgamation with Rayong Refinery expected to occur early next year.

It predicted the paraxylene price would rebound early next year after the price of monoethylene glycol (MEG), which is a feedstock to produce polyester, returns to a normal level.

The MEG price has surged significantly to $1,400 a tonne, due to a shutdown at a plant in Saudi Arabia since July, the broker said.

ACL Securities, however, recommended "hold" on Aromatics shares, with a target price of Bt80.39 apiece. The broker said the weak third-quarter performance was not a surprise.

"We recommend holding the stock to swap with the merged entity's shares. We expect the merger between Aromatics and Rayong Refinery to create synergy, add value to the products and come as a boon to the share price of the merged company," the broker said.

ACL Securities has maintained its normalised-profit forecast of Bt8.96 billion for Aromatics this year, up 59.6 per cent year on year, and its normalised-profit estimate of Bt9.03 billion for next year.

 The Nation