TOP and SPRC Shares Rally after Refining Margin Tops US$20

Shares of TOP and SPRC are surging on Thursday after profit margins for the refineries tipped over US$20 a barrel on Wednesday.

The share price of Star Petroleum Refining Plc. (SET: SPRC) rose THB0.50/share or 4.95% to THB10.60/share, with a trading value of THB463 million.

The share price of Thai Oil Plc. (SET: TOP) rose THB2.50/share or 4.67% to THB56.00/share, with a trading value of THB1,297 million.

Profit margins at a complex refinery in Singapore, the leading indicator for Asian refiners, surpassed US$20 per barrel on Wednesday (April 27), boosted by increased fuel demand during peak holiday seasons as more economies recover from the COVID-19 pandemic and Asia ramps up exports to Europe to compensate for a Russia shortfall.

Additionally, since China is partially locked down to combat the pandemic, Chinese oil refiners have reduced production to prevent oil from overflowing out of the country.

Analysts at CGS-CIMB Securities Thailand believe SPRC will profit the most from rising refining profit margins because it solely operates a refining business, while TOP, BCP, and BCPG all operate a comprehensive petrochemical business.

Earnings of refiners are predicted to grow dramatically in 1Q22; SPRC anticipates a profit of THB3,582 million, up 79% year on year and 93% quarter on quarter, while TOP anticipates a profit of THB6,729 million, up 100% year on year and 34% quarter on quarter.