KKPS Cut Target Price for PTT Shares to THB43.5 amid More Economic Challenges

Kiatnakin Phatra Securities cut its price target for PTT Pcl. due to ongoing macroeconomic issues and a potential political threat, but keeps its “BUY” rating on PTT shares given its strong financial position and cash flow.

In 1Q23, PTT reported a net profit of THB27,855 million, increasing by THB3,063 million or 12.4 % from the 1Q22 at THB24,792 million. The net profit of PTT in the first quarter was higher than the consensus from Refinitiv by 5.71%.

Despite the decline in EBITDA, PTT still reported higher performance in the quarter. This was resulted from lower loss on derivatives and higher gain on foreign exchange rate in 1Q23 in spite of higher finance costs and corporate income taxes.  

The target price for PTT shares was trimmed down by 12.4% to THB43.5.

The brokerage firm lowered its price target for PTT shares due to more economic challenges, despite the company’s robust core earnings in 2022 and first-quarter earnings in 23; however, the latter was below expectations. 

In addition to macroeconomic headwinds, PTT faces potential political risks following the change in government. This resulted in a 15% reduction in NPAT for 2023, to THB110.4 billion. The key driver was the cut in GSP EBITDA by 29% to THB30.8 billion on weak chemical prices and higher gas feedstock cost.

Pipeline EBITDA was also decreased to reflect a new gas flow with a lower volume, lower pipeline tariffs, and earnings contributions from its affiliates and subsidiaries.