PTT Global Chemical: Navigating Challenges with Strategic Support

PTT Global Chemical (PTTGC) is bracing for a challenging 2025 as the polyethylene (PE) market remains under pressure due to an oversupply and renewed trade tensions. Despite these hurdles, PTTGC’s olefin business is expected to benefit from its access to cheap ethane feedstock provided by its parent company, PTT.

Olefins EBITDA and Market Gross Refining Margin (GRM)

PTTGC is poised to see some relief in its olefins segment, thanks to feedstock cost support. However, the Asian polyethylene market is projected to remain in an oversupply stage, with an additional global capacity of 4.5 million tons per annum (mtpa) in 2025 and 11 mtpa during 2026-2027, against a modest demand growth of 4.5-5.0 mtpa annually. On the refining side, PTTGC’s market GRM is expected to improve to \$6.9 per barrel in 2025 from \$5.2 per barrel in 2024, aided by the operationalization of its single-point mooring (SPM) facility to reduce crude oil transport costs.

Financial Summary

• Revenue: THB 632,421 million in 2025F (down from THB 644,919 million in 2024F).
• Operating EBITDA: THB 38,371 million in 2025F (up from THB 33,281 million in 2024F).
• Net Profit: THB 10,564 million in 2025F (a rebound from a loss of THB 15,582 million in 2024F).
• Dividend Yield: Expected to rise to 4.59% in 2025F from 0.40% in 2024F.

CGS International’s Recommendation

PTTGC receives a “Hold” rating with a target price of THB 26.00, implying a modest upside of 2.0%. Key downside risks include unplanned shutdowns of its refinery and chemical assets, while potential upside risks include stronger-than-expected olefins spread.

Indorama Ventures: Focused on Asset Rationalization and Cost-Cutting

Indorama Ventures (IVL) is focusing on asset rationalization and cost-cutting as it navigates a tough environment in 2025. The company is looking to offset pressures in its polyethylene terephthalate (PET) segment by divesting non-core assets and optimizing its operations.

PET Spread and Demand Outlook

The Asian PET spread is likely to remain under pressure as Chinese producers ramp up utilization. In Europe, demand for PET is expected to decline due to new legislation mandating at least 25% recycled plastic content in single-use PET bottles. IVL anticipates limited growth in EU PET demand, further straining its profitability in the region.

Financial Summary

• Revenue: THB 543,090 million in 2025F (up slightly from THB 528,881 million in 2024F).
• Operating EBITDA: THB 50,896 million in 2025F (up from THB 43,479 million in 2024F).
• Net Profit: THB 10,892 million in 2025F (a significant improvement from a loss of THB 14,901 million in 2024F).
• Dividend Yield: Expected to rise to 1.56% in 2025F from 0.40% in 2024F.

CGS International’s Recommendation

IVL is rated as “Hold” with a target price of THB 27.50, offering an upside of 10.4%. The report highlights potential upside risks from a higher-than-expected PET spread and downside risks related to impairment charges on assets like the Corpus Christi Project.

Siam Cement: Struggling with Low Returns and Weak Profitability

Siam Cement (SCC) faces significant challenges in 2025 as its retrofitting project at the Long Son Petrochemical (LSP) plant is unlikely to yield favorable returns. The company is also grappling with weak polyethylene (PE) and polypropylene (PP) spreads, further straining its financial performance.

LSP Retrofitting Project and Profitability

SCC has approved a \$700 million plan to retrofit the LSP plant to handle ethane as an alternative feedstock. However, the project’s internal rate of return (IRR) is estimated at just 2.7%, assuming a naphtha cost of \$550 per ton and an ethane cost of \$350 per ton. The report suggests that shutting down LSP entirely during 2025-2026 may be a more viable option unless feedstock costs decline significantly.

Financial Summary

• Revenue: THB 622,300 million in 2025F (up from THB 583,204 million in 2024F).
• Operating EBITDA: THB 37,364 million in 2025F (up from THB 31,760 million in 2024F).
• Net Profit: THB 13,237 million in 2025F (up from THB 8,663 million in 2024F).
• Dividend Yield: Expected to rise to 2.92% in 2025F from 1.81% in 2024F.

CGS International’s Recommendation

SCC is rated “Reduce” with a target price of THB 150.00, reflecting a downside of 9.6%. The report highlights potential de-rating catalysts, including unplanned shutdowns of its naphtha crackers in Thailand and Vietnam. Upside risks include lower-than-expected naphtha costs and stronger PE prices.