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Published on December 15, 2007

The market has already discounted this possibility.

 Siam City Securities senior analyst Mayuree Chowvikran said fair value for PTT could be reduced

by Bt60 to Bt100 a share if there were no government compensation for the pipelines.

"What PTT will discuss with the Finance Ministry must be closely monitored as now it's unclear about the future of the pipelines," she said. "However, following the ruling today, investing sentiment is back to normal."

Nithi Wanikpun of Citigroup said in a report issued yesterday it was not clear how and when PTT would transfer those assets to the Finance Ministry.

PTT may need to pay tax on the transfer as well as pipeline rental fees to the ministry.

"In our target price of Bt431, PTT pipelines are valued at Bt140 a share based on economic value - that is the expected cash flow to PTT from the pipeline operations," Nithi said.

"Assuming PTT will have to share 10 per cent of its net income from the pipeline business with the ministry as rental fees following the asset transfer, our fair value will decline by Bt14 a share.

"It is too soon to estimate the tax implications at this point since the amount of asset transfer is still unknown."

Kasikorn Asset Management vice chairwoman Wiwan Tharahirunchote said the ruling was expected but its impact was yet to be gauged.

With the government taking the pipelines, fund managers will wait for details of their rental.

If the contract favours PTT - with rent the same or cheaper - then there is likely to be little impact on the stock.

Analysts will revalue the company when they know the details, she added.

The Nation