PTT Global Chemical (PTTG.BK/PTTGC TB)

PTT Global Chemical (PTTG.BK/PTTGC TB)*: Downgrade to reflect weaker than expected sentiment
We downgrade PTTGC to Neutral with a new target price of Bt63.00, from Bt83.00. In the short-term, we expect the company to incur large stock loss following the decline in crude oil price. We roughly expect PTTGC to report 2Q12 earnings of Bt2.0-3.0bn, down from Bt9.8bn in 1Q12. We have cut our forecast on the company’s full-year earnings to Bt30.0bn (-19%) to reflect weaker market sentiment. Moreover, we expect continued overhang from the likely feedstock formula adjustments even though we anticipate limited impact. In the short-term, petrochemical market sentiment should remain weak as buyers are hesitant to refill stockpiles while energy prices are so volatile.
By KGI