Finansia Syrus Securities (FSS) wrote that PTT Global Chemical Public Company Limited (SET: PTTGC) reported a net profit of THB 3.2 billion for the first quarter of 2026, a significant turnaround from a net loss of THB 5.5 billion in the previous quarter. This exceeded market expectations by 21%, primarily due to a much higher-than-expected Market Gross Refining Margin (Market GRM) and a higher-than-anticipated gain from the sale of shares in Thai Tank Terminal.
The refining business saw an average Market GRM of $16 per barrel, notably higher than the market consensus range of $11–12 per barrel. This represented a significant increase from $7.9 per barrel in the previous quarter. The refinery also returned to normal operating capacity at 103% following a temporary shutdown for maintenance in 4Q25.
Additionally, the company registered a stock gain of THB 7.18 billion thanks to a rise in crude oil prices, which increased by more than $50 per barrel. However, PTTGC’s hedging activities—covering both product spreads and crude oil—resulted in a hedging loss of approximately THB 7.99 billion, as actual crude oil prices and spreads rose contrary to the company’s hedged positions.
The petrochemical segment performed as expected. The olefins chain showed slight improvement, driven by a modest decrease in raw material costs. However, there was not yet a clear benefit from increased selling prices of plastic resins, due largely to a time lag. This positive impact is anticipated to become evident starting in the second quarter of 2026.
Improvements were observed in the aromatics chain as well, supported by both an uptick in product spreads and higher production volumes following maintenance-related downtime in the previous quarter.
Excluding special items—specifically, a loss from investment impairment of THB 6.56 billion, offset by a gain from the sale of Thai Tank Terminal shares amounting to about THB 3.30 billion—PTTGC recorded a net special loss of THB 3.26 billion. When factoring in a foreign exchange gain of THB 1 billion, the company achieved a normalized operating profit of THB 6.35 billion, compared to a loss of THB 5 billion in the previous quarter and THB 3.9 billion in 1Q25.
Looking ahead, earnings in Q2 are expected to improve on a quarter-over-quarter basis, led by the olefins petrochemical business, where profits are projected to exceed THB 8–9 billion, supported by a 60–70% increase in PE/PP plastic resin prices. For the refining segment, the gross refining margin is expected to decline substantially due to a sharp rise in crude oil costs (crude premium) in line with global markets and downward adjustments to ex-refinery prices.
Nonetheless, margins are not anticipated to turn negative and should remain at a profitable level. With crude oil prices currently above $100 per barrel—around the same level as at the end of the first quarter—no stock gain is expected for the second quarter unless they drop below the level, which could result in a stock loss.
Similarly, if oil spreads and product prices fall, there could be hedging gains. No additional asset impairment is anticipated, presenting a potential opportunity for investors to take positions ahead of an exceptionally strong second-quarter result, according to the brokerage.
