PTTGC and IVL Rise as Brokers Foresee Positive Sentiment from Recovering Demand in China

PTTGC and IVL extended their gains on Tuesday, following a rise on Monday over optimism that demand from China is recovering, with PTTGC increasing 1.90% to THB 40.25 and IVL rose 1.21% to THB 25.00 per share.

On Monday, the petrochemical stock prices surged, led by PTT Global Chemical Public Company Limited (SET: PTTGC), which rose by 3.27% to close at THB 39.50 per share. Indorama Ventures Public Company Limited (SET: IVL) also saw an increase of 4.22% to close at THB 24.70, reflecting a positive response to China’s economic recovery and a growing demand.

Krungsri Capital Securities (KCS) gave a “BUY” recommendation for IVL, indicating a positive signal from China’s economic recovery, especially PMI index showing growth for the first time in six months and reaching the highest level in one year of 50.8 points, which was better than the expected of 50.1 points and the previous level of 49.1 points. The World Container Index (WCI) was expected to show a continuous downward trend for seven weeks.

The firm maintained its view on IVL’s performance in 2024, as the company was expected to turn profitable at THB 8.992 billion (from a loss in the previous year) due to a decrease in stock loss and a recovery in core EBITDA per ton to USD 99, a 19% increase year-on-year, driven by the recovery of PET due to reduced oversupply from Chinese production plants, recovery in US automobile demand, and increased demand for fibers, which are required for the automotive sector and indicating a recovery in China. IVL’s share price traded at a P/BV ratio of around 0.8x in 2024. The analyst gave a “BUY” recommendation with a target price of THB 26.50.

Kasikorn Securities (KS) stated that the better-than-expected PMI index in China was seen as a positive sentiment for export stocks, particularly in the petrochemical sector, such as PTTGC. The company is expected to recover in 2024, with a projected net profit of THB 6.391 billion, compared to THB 999 million in 2023. The polyethylene and aromatics industry was poised for an upward cycle. Thus, the analyst gave a “BUY” recommendation for PTTGC with a target price of THB 42.50.