Overview of IRPC

IRPC Public Company Limited (IRPC), one of Southeast Asia’s premier integrated petrochemical companies, operates a refinery and petrochemical complex in Rayong, Thailand, with a capacity of 215kbd. Despite facing substantial challenges in 2024, the company’s current valuation presents a strong opportunity for long-term investors.

IRPC’s Financial Performance in 4Q24

IRPC’s 4Q24 results are expected to show a net loss of Bt994 million, marking a challenging quarter for the company. This core loss of Bt350 million would bring the company’s full-year 2024 core loss to Bt4.0 billion—a record low. The management’s guidance highlights steady operations at an average run rate of 93% (200kbd), an increase from 89% in 4Q23. However, the market gross integrated margin (GIM) of US\$8.7/bbl remains below the breakeven level of US\$10.5/bbl.

Additionally, the company faced significant forex losses of Bt450 million due to the weakening Thai baht and an inventory loss of Bt625 million caused by weaker crude prices. The petrochemical business experienced pressure from declining spreads for high-density polyethylene (HDPE) and low-density polyethylene (LDPE), which fell 2.2% and 4.7% quarter-on-quarter, respectively. Polypropylene, which accounts for 40% of IRPC’s production volume, also stayed at the breakeven level of US\$341/tonne, reflecting subdued demand and increased supply in China.

Debt Management and Long-Term Growth Plans

To support its long-term growth, IRPC plans to issue bonds worth Bt13.0 billion in 1Q25. The proceeds will be used to refinance existing debt and fund capital expenditure over the next five years. Despite these challenges, the company’s net debt-to-equity ratio remains below 1.2x, and its debt-service coverage ratio stays above 1.50x, indicating IRPC’s ability to meet its debt obligations.

Key Financial Metrics

IRPC’s financial forecast showcases mixed performance metrics:

• Revenue: Expected to grow modestly from Bt324,115 million in 2024 to Bt340,326 million in 2025.
• EBITDA: Projected to increase significantly from Bt4,925 million in 2024 to Bt12,077 million in 2025.
• Net Profit: Forecasted to recover from a loss of Bt5,012 million in 2024 to a profit of Bt670 million in 2025.
• Net Debt-to-Equity Ratio: Expected to rise from 99.4% in 2024 to 102.5% in 2025.

Valuation and Recommendation

UOB Kay Hian maintains a “BUY” recommendation for IRPC, albeit with a revised target price of Bt1.50, down from the previous Bt1.90. The new valuation is based on 0.5x 2025F P/B, which is -2SD to regional peers’ five-year historical mean. With the stock trading at a historical low of 0.3x 2025F P/B—one of the lowest in the Thai petrochemical sector—investors have a lucrative opportunity to accumulate shares for the long term.

Environmental, Social, and Governance (ESG) Initiatives

IRPC demonstrates a strong commitment to ESG principles:

• Environmental: The company aims to reduce greenhouse gas emissions by 20% by 2030.
• Social: IRPC allocates 3% of its average net profit over the past three years to corporate social responsibility (CSR) projects. These include community, educational, and social development initiatives aimed at improving the wellbeing of communities around the IRPC Industrial Zone.
• Governance: IRPC’s Board of Directors is dedicated to promoting corporate governance and operational excellence to maximize shareholder and stakeholder benefits.

Upcoming Catalysts

Investors should mark their calendars for February 10, 2025, when IRPC will announce its full-year 2024 results. This event could provide further clarity on the company’s recovery trajectory and strategy for 2025.