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Bangchak Petroleum

1Q14: Beat thanks to strong marketing business BUY

Bangchak Petroleum Plc (BCP)

1Q14 net profit Bt1.56bn (EPS=Bt1.13) exceeded SCBS and market estimates, rising

126.3% QoQ, as lower competition in the domestic market boosted profit from the

marketing business. Another factor was higher refinery GRM. 1Q14 accounted for 33%

of our full-year forecast but we expect 2Q14 to be lowered by a planned maintenance

shutdown. We maintain our 2014F with upside from insurance compensation.

Valuation looks undemanding at only 8.5x 2014F PE. We maintain BUY, with TP of Bt44.


Sales revenue rose 3.3% QoQ and 5% YoY on more power solar contribution (+5.8%

QoQ and +99.1% YoY) that offset the lower crude run at its refinery to 97.82kbd in

1Q14 (82% utilization) from 101.17kbd in 4Q13 and 99.95kbd in 1Q13.

Base GRM widened to US$6.41/bbl in 1Q14 from US$4.82/bbl in 4Q13 on higher

gasoline crack spread but was still below 1Q13's US$8.1/bbl. With net gain from oil

hedging and inventory gain of US$0.47/bbl, accounting GRM was US$6.88/bbl,

down from US$8.1/bbl in 4Q13 and US$10.25/bbl in 1Q14.

Operating profit from the marketing business surged 402% QoQ and 39% YoY as

competition in the domestic market eased from 4Q13 from better regional market

conditions and lower ethanol cost. This lifted marketing margin to Bt0.67/liter in

1Q14 from Bt0.49/liter in 4Q13 and 1Q13.

Solar profit contribution increased 7% QoQ and 102.3% YoY. The jump YoY is due to

a full quarter of the second phase of its solar farm in Ayudhya after its late-1Q13

startup and the QoQ increase from the startup of the first unit of phase 3 in the

latter half of March 2014. At the end of 1Q14, 78MW capacity was operating.

EBITDA contribution from solar rose to 17% in 1Q14 from 15% in 2013.

Outlook for 2Q14F. The maintenance shutdown will cut crude run to 55kbd in 2Q14

with a higher GRM QoQ thanks to supply loss from regional refinery maintenance

shutdowns and greater proportion of local feedstock.

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