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Published on December 19, 2007

PTT's share price plunged 2.72 per cent yesterday after trading in the petroleum giant's shares resumed, despite analysts' jubilance over the rather limited financial damage from last Friday's court ruling.

"Foreign investors dumped Thai shares, because they were locking in profits and accumulating cash reserves ahead of a worse-than-expected global economic outlook. As most of their holdings are in the energy sector, PTT and others suffered greatly," said KGI Securities (Thailand) vice president Adisak Kammoon.

The selling pressure will continue until the end of the month, he said.

PTT lost Bt10 to end at Bt358 on turnover of Bt3.65 billion, while major subsidiary PTT Exploration and Production fell Bt1, or 0.68 per cent, to Bt148.

The market saw Bt5 billion in foreign net selling yesterday, which pushed the composite Stock Exchange of Thailand Index down 3.72 points, or 0.45 per cent, to 813.9 on turnover of Bt18.79 billion.

The Supreme Administrative Court last Friday ordered PTT to transfer its natural-gas transmission pipelines to the government, and stock analysts were concerned about the eventual cost of that to PTT.

At the Cabinet's weekly meeting yesterday, it was resolved that PTT return three pipelines worth Bt15 billion to the state and pay rent for having used them. While the transfer cost is estimated at Bt2 billion, the back rent will be no more than Bt1.5 billion. The 30-year lease is preliminarily calculated at Bt8.8 billion, or Bt200 million a year.

"The impact is less than what was forecast. At a cost of Bt3.5 billion, if booked immediately this quarter it would shave about Bt1 or Bt2 off of PTT's share-price valuation," Paiboon Nalinthrangkurn of Tisco Securities said during a panel presentation with other analysts and fund managers.

Even if rent were raised to Bt300 million a year on growing transmission volume, PTT's bottom line would not take much of a hit, he said.

"Even if the rent were raised to 10-20 per cent of natural-gas revenue, the impact would not be too severe."

Poranee Thongyen of Asia Plus Securities said the natural-gas-pipeline business contributed only

1.6 per cent of PTT's total revenue, compared with 40 per cent from oil and 24 per cent from gas. For the net profit, its share is only 15 per cent, based on a flow of 3.3 billion cubic feet per day.

Wiwan Tharahirunchote of Kasikorn Asset Management (KAsset) said while risks were still associated with PTT, the company would remain a darling of fund managers, due to its huge capitalisation.

KAsset had been prepared to exclude PTT from its net asset value calculation if the share suspension lasted until the asset transfer was completed. Many funds that carry PTT in their portfolios halted unit-trust transactions during the suspension period.

"It's hard [for fund managers] not to fall in love with PTT, because of its weighting of 16 per cent. Still, we hope that in the years to come, more big-cap stocks will be included in our portfolios," she said.

Analysts and fund managers were delighted that PTT was not delisted and was allowed to resume trading yesterday.

Siriporn Chanjindamanee,

 Achara Deboonme

 The Nation