Date of Report: 24 October 2024
Broker: UOB Kay Hian
Company Overview
Indorama Ventures (IVL TB) is one of the world’s largest polyester chain manufacturers, boasting a total production capacity of 17 million tonnes.
Stock Data
- Share Price: Bt25.00
- Target Price: Bt32.00 (previously Bt22.50)
- Market Cap:
- Bt108,360.9 million
- US$3,042.0 million
- Shares Issued: 5,614.6 million
- Average Daily Turnover (3-month): US$12.4 million
- 52-week High/Low: Bt33.75 / Bt17.90
Major Shareholders
- Lohia Family: 66.0%
- Bangkok Bank: 4.8%
Financial Performance
3Q24 Results Preview
- Expected Reporting Date: 11 November 2024
- Forecasted Core Profit: Bt2.4 billion, indicating a 98% quarter-on-quarter increase and a reversal from a loss of Bt299 million in 3Q23.
- Net Profit Projection: Bt1.1 billion, up 488% year-on-year from a loss of Bt23.0 billion in 2Q24.
- Cost Savings Contribution: Bt600 million due to asset optimization.
Production and Profit Forecasts
- Expected Revenue for 3Q24: Bt148.5 billion, up 7% year-on-year.
- Core EBITDA: Expected to be Bt13.4 billion, a 25% increase year-on-year.
- Inventory Losses: Projected at Bt1.34 billion.
Strategic Outlook
- 4Q24 Earnings: Expected to remain flat at Bt2.4 billion due to low seasonal demand but could be offset by cost savings from asset optimization.
- Growth Projections for 2025:
- Anticipated production volume growth of 3% year-on-year.
- Projected cost savings of approximately US$150 million due to ongoing asset optimization measures.
Spin-off Plans
- Business Spin-off: IVL plans to spin off and list two divisions:
- Downstream IOD business (Indovinya), focusing on surfactants and coatings.
- Packaging business.
- Objective: To unlock shareholder value and improve financial ratios, aiming for execution by 2026.
Key Financials
Financial Forecasts
| Year |
Net Turnover (Btm) |
EBITDA (Btm) |
Net Profit (Rep./Act.) (Btm) |
EPS (Bt) |
| 2023 |
541,458 |
31,510 |
(10,798) |
0.4 |
| 2024F |
548,514 |
52,095 |
(18,457) |
1.1 |
| 2025F |
615,942 |
60,614 |
12,785 |
2.3 |
| 2026F |
734,884 |
69,772 |
18,605 |
3.3 |
Market Impact
- Earnings Forecasts: The market is expected to revise earnings forecasts upward following the announcement of 3Q24 results.
- Potential Earnings Upside: Anticipated upside of around 30% from current Bloomberg consensus forecast for 2025.
Environmental, Social, Governance (ESG)
- Environmental Commitment: IVL aims to reduce greenhouse gas emissions by 10% in 2025.
- Social Initiatives: Conducting 65 initiatives for recycling awareness and education.
- Governance Rating: Received an “Excellent – 5 Star” CG score from the Thai Institute of Directors for nine consecutive years.
