Kiatnakin Securities has reiterated its “BUY” rating on Thai Oil (SET: TOP), raising its price objective (PO) by 16.3% to 43.5 baht per share from the previous target, as the company’s risk profile shows signs of improvement. The new target represents a healthy upside from the current share price of 35.75 baht.
Valuation Adjustments and Improved Outlook
The broker’s updated estimate is based on rolling forward its base valuation methodology to 2026E earnings, and revising target price-to-earnings (P/E) and price-to-book (P/B) multiples. The target P/E now stands at 6.3x (previously 5.5x), and the target P/B is set at 0.64x (previously 0.6x). Both ratios remain at the low end of Thai Oil’s historical trading range, reflecting a still-cautious approach.
Significantly, Kiatnakin reduced the discount factor on Thai Oil from 30% to 20%, acknowledging progress on the Clean Fuel Project (CFP) and a recent US$438 million performance bond claim win. This suggests Thai Oil could report both a sooner and less costly CFP completion than previously expected.
Earnings Estimates and Risks
Despite the more constructive outlook on project delivery and valuation, Kiatnakin slightly trimmed its core 2025E net profit forecast by 2.6% to 11.9 billion baht, citing a lower aromatic spread assumption. This is partially offset by an 11% upgrade in gross refining margin (GRM) to US$5.5/bbl. For 2026E, earnings projection was cut by 14% to 13.3 billion baht, mainly due to a sharp forecast reduction in aromatic spreads. Both years, however, benefit from higher GRM forecasts and an increase in refinery output estimates.
While regulatory risk remains—particularly with Thailand’s general election on the horizon in 2Q26—and market volatility continues to loom, Kiatnakin believes Thai Oil now deserves a valuation re-rating. The company’s 2026E P/E of 6.2x is cited as the lowest among global refinery peers, and an expected net profit after tax (NPAT) growth of 12% for 2026, along with a prospective dividend yield of 6.4%, reinforces the BUY recommendation.
