Thai Oil Public Company Limited (TOP TB): Performance and Future Outlook
Thai Oil Public Company Limited (TOP), a major player in the oil refinery industry, reported a mixed bag of results for 2024, with some notable improvements in Q4. Despite a challenging year, TOP demonstrated resilience in certain areas while facing pressures in others.
Q4 2024 Performance Highlights
- TOP’s Q4 2024 net profit reached Bt2.8 billion, bouncing back from a Bt4.2 billion net loss in Q3 2024. This exceeded UOB Kay Hian’s estimates by 20% and consensus forecasts by 28%, driven by a lower-than-expected forex loss and a hedging gain of Bt224 million.
- Market gross integrated margin (GIM) increased to US\$7.1/bbl in Q4 2024, up from US\$5.4/bbl in Q3 2024. This improvement was driven by the refinery business returning to profitability and better spreads in the lubricant business, offsetting weaker petrochemical spreads.
- Petrochemical profits surged by 172% year-on-year in Q4 2024, while contributions from the refinery and lube base segments remained subdued.
Full-Year 2024 Key Financial Metrics
- Revenue slightly declined by 1% year-on-year to Bt466.8 billion.
- EBITDA dropped by 44% to Bt21.0 billion, while operating profit plummeted by 56% to Bt12.9 billion.
- Net profit fell by 49% year-on-year to Bt10.0 billion, primarily due to a drop in market GRM.
- Market GIM for 2024 was recorded at US\$7.1/bbl, significantly lower than US\$10.0/bbl in 2023.
Dividend Announcement
TOP announced a dividend of Bt0.70/share for the second half of 2024, bringing the full-year dividend to Bt1.90/share. The ex-date is set for 28 February 2025, with payment scheduled for 28 April 2025. For 2025, dividends are expected to remain at similar levels.
Future Projects and Developments
- Clean Fuel Project (CFP): TOP plans to seek approval for an additional US\$1.78 billion investment in its CFP during an Extraordinary General Meeting (EGM) on 21 February 2025. The project timeline has been revised, with production now expected to commence in Q3 2028.
- Single Buoy Mooring #2 (SBM#2): Operations may resume earlier than anticipated, potentially as soon as Q2 2025. This development could boost 2025 net profit forecasts by 15% and increase the target price by Bt4.00 due to reduced oil transportation costs.
Valuation and Recommendation
The analysts maintain a HOLD recommendation for TOP, with a target price of Bt27.00, based on a forward PE of 7x. However, the delayed CFP remains an overhang on the stock’s performance. Investors are advised to consider alternative opportunities within the oil and gas sector, such as Bangchak Corporation (BCP TB) and Indorama Ventures (IVL TB), which are highlighted as top picks.
