Brokers revise down profit on oil firm's poor Q1 performance

TOP recorded a consolidated net profit of Bt3.87 million in the first quarter, down from Bt5.94 million in the same period last year.

Siam City Securities (SCIBS) research said the net profit has fallen far below expectations.

The drop prompted SCIBS to lower the net profit forecast by 17 per cent to Bt18.94 billion this year.

The revision is based on gross refining margin (GRM), down from $6.50 a barrel to $6.20 a barrel. SCIBS estimated the company's GRM would be $6 a barrel.

It said the shortfall was caused by the shutdown of Thai Paraxylene (TPX), a wholly owned subsidiary, since January 14.

Work had to be done to allow the firm to double its output.

SCIBS expected TOP to recover from the increase of gross refining margin that had moved above $10 per barrel last month.

TPX has also resumed operations and raised production.

It recommended a buy for the stock and put its fair price at Bt97 per share.

KGI Securities also sharply revised down TOP's net profit by 11 per cent to Bt1.81 billion on year.

It said the petrochemical spread is lower than expected, affecting the PX spread.

But KGI was hopeful that its GRM will rise in the second quarter because of a shut down of refining plants in Asia.

The demand for petrol is expected to rise if the United States stages a recovery later this year, it said.

KGI lowered TOP's fair price to just Bt89 and maintained a buy position for the firm.

ACL Securities lowered TOP's net profit by 5 per cent.

It also sharply cut its target price for Top from Bt94 to just Bt85.

ACLS said TOP's net profit should recover after TPX moves to increase production.

Ayudhya Securities noted that the spread for petroleum, diesel and jet fuel will rise in the second quarter.

That could boost TOP's revenue in the second quarter.

The operation capacity of TPX and its aromatic expansion are factors that should help its income, it said.

Ayudhya said TOP's profit this year may rise 5 per cent to Bt20.06 billion year on year.

The key factor driving its growth was an expansion in oil refining capacity to 275,000 barrels per day.

It would also increase TPX's capacity to 900,000 tonnes a year.

It put the stock's value at Bt94, and expects it to offer a 6-per-cent dividend yield.