The Nation

business

Smaller
Larger

The Bangchak Petroleum

Solar power plant: powerhouse in 2H14



The Bangchak Petroleum Plc (BCP)

2Q14 net profit dropped by 19.4%qoq. Profit in 2H14 is projected to

come mainly from solar power business, while profit from refinery

business would stay flat due to seasonal effect. We reiterate to buy,

focusing on strong business base.

- 2Q14 profit drops as expected

2Q14 net profit was reported at B1.26bn, dropping 19.4%qoq (close to our

projection). Despite a 46-day planned shutdown of a refinery, BCP benefited

from the following contribution: 1) Net GRM rose by 10.6%qoq. 2) Income

from all five units of Phase 3 solar power plants totaling 48 megawatts was

booked, starting from late-April 2014. 3) Profit from marketing business

increased by 10%qoq owing to higher marketing margin. 4) B521m

insurance claim for property damage was booked (not included in our

earnings forecast yet). Overall, BCP’s 1H14 net profit was B2.82bn, rising

8.2%yoy.

- Solar power plant: powerhouse in 2H14

We preliminarily maintain FY2014 earnings forecast. 1H14 net profit made

up 70% of our FY2014 earnings forecast (B500m insurance claim not

included). However, 2H14 net profit is unpredictable as a result of

extraordinary items; we are currently waiting for clarity on events in 2H14

in order to revise FY2014 earnings forecast. Profit in 2H14 is projected to

come mainly from solar power business; production from all three phases

would be fully recognized. Meanwhile, profit from refinery business would

stay flat from 1H14. Though a refinery has resumed working after a

shutdown, 2H14 GRM is expected to drop from 1H14 (high season).

- BUY. 5%p.a. dividend yield

We derive FY2014 fair value (DCF) at B36. We reiterate BUY; its profit is

expected to grow continuously and stably, and average dividend yield can

be expected at 5%p.a


Comments conditions

Users are solely responsible for their comments.We reserve the right to remove any comment and revoke posting rights for any reason withou prior notice.