Kasikorn Securities has shifted its stance on Thailand’s petrochemical sector to a more optimistic outlook, buoyed by the recent announcements from China and South Korea to trim output in the segment.
The firm’s analysis of second-quarter 2025 earnings for 13 energy and petrochemical companies revealed aggregate profits totaling THB48.8 billion—down 8% year-on-year but up 5% quarter-on-quarter—thanks largely to one-off gains, notably from the Chandra Asri/CAP investment and bond buybacks at SCC and TOP. Top performers included conglomerates such as SCC and PTTGC, while laggards like BANPU, OR, SPRC, and IVL contended with ongoing margin pressures.
Looking ahead to the third quarter, Kasikorn expects core earnings to show sequential improvement at names like PTTEP, BCP, and BSRC. PTTGC is forecast to see better results both year-on-year and quarter-on-quarter, although it may still remain in the red, helped by cost-cutting and absence of major impairments. Investors should also watch for potential gains from asset monetizations, with PTT (via its Lotus stake) and SCC (via CAP stake) both possible candidates in the coming quarter.
On the product front, most olefins and aromatics spreads are anticipated to decline by 5% to 10% from the previous quarter, even though paraxylene (PX) prices are likely to climb about 10%. Refiners, however, will probably record inventory losses, with SPRC singled out as especially vulnerable due to extensive maintenance and weaker gasoline margins.
On the investment front, Kasikorn continues to hold a negative view on the energy sector but has shifted its top pick from PTT to Thai Oil, citing its relatively cheap valuation (0.40x 2026 PBV versus peers at 0.50x), the easing of CFP risks as key construction resumes, and the potential for asset monetization. Meanwhile, the house’s perspective on petrochemicals moves from ‘Negative’ to ‘Neutral,’ as capacity rationalization is now expected to drive a cyclical upturn within the next 12–18 months.
Significant changes include an upgrade for SCC—from Underperform to Outperform—adding it to the brokerage’s top picks alongside PTTGC, which continues to benefit from the anticipated capacity cuts. Meanwhile, IVL has been dropped from the top recommendations due to less significant gains from asset monetizations. Adjustments in price-to-book valuations reflect expected upside from these industry shifts, particularly for IRPC, PTTGC, and SCC.
