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Published on April 8, 2008

The manufacturer and distributor of asphalt products recorded a consolidated net profit of Bt306 million last year.

After meeting with Tipco's management, Ayudhya Securities said it was informed the firm's Malaysia plant had been scheduled to start operating in this year's first quarter. But rising crude-oil prices delayed the plan, forcing it to suspend operations. At the same time, the company's asphalt sales were expected to be stable this year, because demand for asphalt is remaining constant, unlike last year.

The broker said asphalt exports to China had eased, because of recent storms. China this year will postpone several construction projects, because it is hosting the Beijing Olympics. To boost revenue, the company needs to secure new markets. The securities firm expects revenue to drop 25 per cent, but Tipco should earn a net profit of Bt340 million.

Ayudhya recommends "sell" on the stock.

Kim Eng Securities shares that position. It said the storms in China had affected road construction in that country, which would in turn affect Tipco, because the mainland formed 35-40 per cent of its export market.

It expects Tipco's revenue this year to rise only 5 per cent, or Bt10.97 billion, with the net profit dropping 6 per cent.

Kim Eng recommends "hold", from "buy" previously.

Siam City Securities predicts Tipco's sales this year will drop 25 per cent from last year. The company will have slim margins from its sales, because production costs have risen Bt13,000 a tonne, or 40 per cent year on year.

The product price is only Bt15,000 a tonne, up 25 per cent year on year.

However, the broker said its net profit should match last year's as it awaits production to commence at its Malaysian plant, buying orders should pick up again in the second quarter, and after the games China should also resume its infrastructure projects. All of these factors will boost sales 6-8 per cent year on year.

Siam City Securities also said the new asphalt plant could boost its net profit to Bt365 million at a later stage. It recommends "buy" on Tipco shares at Bt32.50 apiece.

Tipco closed at Bt19.20 last Friday.

The Nation