Introduction
In the dynamic world of petrochemicals, PTT Global Chemical (PTTGC) stands as a notable entity. With its fully integrated operations, the company delivers a range of products derived from olefins, including ethylene and propylene. This comprehensive analysis delves into PTTGC’s current market performance, financial projections, and strategic decisions impacting its future.
Company Overview and Market Position
PTT Global Chemical has maintained its position as a leader in the materials sector, with significant contributions to the petrochemical industry. Its market capitalization is valued at Bt113,848.4 million, equating to approximately US\$3,324.9 million, with a substantial shareholding by PTT at 48.9%. Despite challenges, the company’s strategy focuses on leveraging its robust infrastructure to optimize production and navigate market volatilities.
4Q24 Performance Insights
The fourth quarter of 2024 has been a period of recovery for PTTGC, albeit with continued net losses. The company has announced the termination of PTT Asahi Chemical (PTTAC), incurring a cost of Bt3.0 billion to Bt4.0 billion. Additionally, a new ethane sales agreement has led to a 3% increase in feedstock costs, impacting profitability. Despite these challenges, PTTGC is poised to enhance its ethane feedstock volume, projecting a rise in its production mix proportion from 32-33% in 2024 to 35-36% in 2025.
Strategic Moves and Financial Projections
PTTGC’s strategic moves, including the termination of operations at PTTAC and Vencorex, are set to reshape its financial landscape. In 3Q24, PTTGC recorded significant impairment losses for these entities. However, the company anticipates an additional Bt5.0 billion in net profit in 2025 due to the absence of losses from these operations. The company also plans to gradually sell Vencorex’s assets, with proceeds expected to contribute positively from 2025 onwards.
Financial Performance and Key Metrics
PTTGC’s financial metrics for the year ending 31 December 2024 project a net turnover of Bt605,256 million, with an EBITDA of Bt29,424 million. Despite these figures, the company anticipates a net loss of Bt22,761 million for the year. The strategic sale of Vencorex’s assets and the cessation of PTTAC operations are expected to enhance profitability in 2025, with projected net profits of Bt10,220 million and further growth in 2026.
Stock Valuation and Recommendation
UOB Kay Hian maintains a ‘HOLD’ recommendation for PTTGC, with a target price of Bt24.50. The company faces short-term pressures, primarily due to the expected net loss in 4Q24 attributed to weak petrochemical spreads and impairment recognitions. The analysis suggests that investors may find better opportunities in leading stocks within the oil and gas sector, such as Bangchak Corporation and Indorama Ventures, which present more favorable prospects.
Environmental, Social, and Governance (ESG) Commitments
PTTGC is committed to sustainable business practices, as reflected in its high ESG ratings. The company aims to achieve net-zero greenhouse gas emissions by 2050 through resource-efficient operations and strong partnerships. Its social initiatives focus on generating societal value, reducing inequality, and enhancing community wellbeing. Governance efforts are centered on transparency and the development of innovative, eco-friendly chemical solutions.
