Kiatnakin Phatra Securities (KKPS) has a positive view on the termination of UJV’s contract by Thai Oil Public Company Limited (SET: TOP), citing that the risk on Clean Fuel Project (CFP) has already priced in.
KKPS stated that TOP is planning for new EPC contractors with a bidding process expected to conclude in 3Q25, after which the estimated COD (3Q28) and cost overrun ($1.77 billion) will be re-evaluated, potentially resulting in a faster timeline and lower cost than current conservative estimates.
Following the termination, TOP is expected to claim the remainder of its performance bond of US$122mn, having already claimed and received the first tranche of US$358mn in 1Q25. The UJV consortium has initiated arbitration proceedings against TOP regarding the first performance bond claim and is expected to do the same for the final claim. Saipem noted submitting a proposal to TOP and remains open to engaging on the project but will take necessary measures to protect its interests due to a lack of engagement.
KKPS noted that despite the developments, it is suggested that the CFP risk has been priced in, maintaining a positive rating for TOP with a “BUY” recommendation at a target price of THB43.20 per share.
