J.P.Morgan analysts have noted contrasting trajectories in the upcoming months for Thai petrochemical giants PTT Global Chemical (PTTGC) and Malaysia’s Petronas Chemicals (PCHEM). Both companies have seen their stock values drop significantly this year, dipping between 23-28%, largely due to earnings revisions that slashed expectations by roughly 30-40%. Despite this, PTTGC and PCHEM are poised to experience different outcomes moving forward.
PTTGC’s bottomline appears to be on the road to recovery, backed by various restructuring and cost-cutting strategies aimed at enhancing the company’s bottom line. Conversely, PCHEM is likely to face continued challenges, with decreased asset reliability and slumping prices for oil and gas affecting its financial performance.
One of PTTGC’s strengths lies in its valuation, with shares trading at a modest 0.3 times book value, in contrast with PCHEM’s higher value of around 0.7 times. The recommendation from J.P.Morgan remains positive on PTTGC, while they urge caution with PCHEM.
A key driver of confidence in PTTGC is its ongoing restructuring, which began in late 2024. This initiative has started to bolster operational profits, even amidst current market instability. In the first quarter of 2025 alone, the company saved approximately 800 million baht and has elevated its cost-saving target to 5.5 billion baht for the year.
Moreover, PTTGC plans to offload around 30 billion baht worth of non-core assets by 2026 through asset-light strategy, akin to previous divestitures in tank terminals and logistics assets. The company’s focus is on attracting strategic partners and investors while safeguarding the competitiveness of its core assets. These efforts aim to reduce debt levels, targeting a debt-to-EBITDA ratio below four times while preserving its investment-grade credit rating.
Additional insights from a recent PTTGC analyst briefing revealed that Vencorex will be deconsolidated starting mid-May, with the liquidation process already underway in France. This is expected to result in EBITDA losses under 300 million baht for the second quarter, compared to 634 million baht previously recorded. PTTGC anticipates a non-cash gain of 30 to 40 million euros from this asset deconsolidation.
Additionally, the company plans to sell its U.S. and Thai Vencorex assets by the second half of 2025. PTTGC’s exposure in the U.S. primarily involves Allnex’s operations, though the impact of tariffs is expected to be minimal due to strong local customer and supply chain relationships, with over 90% of operations being local.
