Overview of PTT Oil & Retail Business (OR)

PTT Oil & Retail Business (OR) operates an integrated oil and non-oil retailing platform both in Thailand and internationally. Its business includes the sales and distribution of petroleum products, retail marketing, coffee shops, and other food and beverage outlets. The company is a key player in the consumer discretionary sector with a market capitalization of Bt184.8 billion (US\$5.38 billion).

OR’s stock has faced a challenging year, with its price declining by 24.9% year-on-year. However, its financial performance in 4Q24 marked a significant recovery, prompting an upgrade in its stock recommendation to “BUY” with a target price of Bt16.00, reflecting an upside potential of +40.8%.

4Q24 Financial Highlights

The company reported a net profit of Bt3.0 billion in 4Q24, reversing a net loss of Bt1.6 billion in 3Q24. Key drivers of this turnaround included:

• A stock gain of Bt40 million compared to a stock loss of Bt2.9 billion in 3Q24.
• A 61% quarter-on-quarter reduction in losses from extra items, such as impairments and accounting adjustments.

Despite these improvements, OR’s net profit for 2024 fell 31% year-on-year to Bt7.65 billion, primarily due to intense market competition and other business risks. However, the outlook for 2025 appears promising, with net profit expected to grow by 26% year-on-year, supported by robust domestic petroleum demand.

Segment Performance Analysis

Mobility Business

The mobility segment showed a strong recovery in 4Q24, with EBITDA increasing both quarter-on-quarter and year-on-year. This was attributed to a recovery in marketing margins, which rose to Bt0.83 per litre from Bt0.51 per litre in 3Q24. Total oil sales volume increased by 9.3% quarter-on-quarter, bolstered by peak tourism season, expansion of oil stations, and effective cost control measures. These factors helped improve the EBITDA margin significantly.

Lifestyle Business

Café Amazon, a flagship brand under OR’s lifestyle business, achieved record-high sales in 4Q24. The segment reported an 8.1% quarter-on-quarter increase in revenue and a 7.3% rise in EBITDA. Café Amazon sold 103 million cups during this period, marking a milestone in its operational history. The EBITDA margin for the lifestyle business improved to 25.5% from 20.2% in 3Q24, driven by increased sales and reduced losses from extra items.

Global Business

The global segment experienced a 4.6% quarter-on-quarter decline in total revenue due to lower selling prices. However, sales volume remained stable, supported by seasonal growth in Laos and Cambodia. Aviation fuel sales in the Philippines declined, but EBITDA increased by 15.6% quarter-on-quarter, driven by a recovery in marketing margins and higher Café Amazon sales in Cambodia and Laos.

Dividend Announcement

OR announced a 2H24 dividend of Bt0.13 per share, bringing the total dividend for 2024 to Bt0.40 per share. The ex-date is set for February 24, 2025, with payment scheduled for April 29, 2025. The dividend for 2025 is projected to increase to Bt0.50 per share, reflecting the company’s optimistic outlook.

Key Financial Metrics and Forecasts

OR’s financial projections indicate a strong recovery in 2025:

• Net turnover is forecasted to increase from Bt723.96 billion in 2024 to Bt807.92 billion in 2025.
• EBITDA is expected to rise to Bt22.83 billion, up from Bt18.82 billion in 2024.
• Net profit for 2025 is projected at Bt9.6 billion, a 26% year-on-year growth.
• The mobility business is expected to achieve a 3% growth in total oil sales volume, with marketing margins improving to Bt0.95 per litre.
• The lifestyle business aims to expand Café Amazon outlets to 4,812 by the end of 2025, with sales projected to grow by 4% year-on-year.

Environmental, Social, and Governance (ESG) Commitments

Environmental Initiatives

OR is committed to reducing greenhouse gas emissions (Scope 1 and Scope 2) by more than one-third by 2030, using 2022 as the base year. The company also plans to reduce conventional fuel use intensity by the same margin and expand its EV Station PluZ network to achieve 7,000 DC connectors by 2030.

Social Goals

OR aims to enhance the quality of life for 17,000 communities, impacting 13 million people by 2030. The company also plans to establish 500 Café Amazon for Chance branches by 2026 to promote social inclusion.

Governance Principles

OR adheres to five core governance principles: accountability, responsibility, equitable treatment, transparency, and vision. The company has implemented robust systems for the selection of key management positions, along with effective anti-fraud and corruption policies.

Valuation and Recommendation

UOB Kay Hian has upgraded OR’s rating to “BUY” with a target price of Bt16.00, based on a 20x 2025F PE ratio. This reflects a significant upside potential of 40.8%. The recommendation is underpinned by an expected recovery in net profit, driven by rising domestic petroleum demand and strategic business expansions.