KGI Securities (Thailand) has revised its earnings projections for Star Petroleum Refining Public Company Limited (SET: SPRC), reflecting a positive outlook on the company’s cost structure and core profitability. The update follows adjustments in the accounting treatment for maintenance shutdown expenses, bringing SPRC in line with domestic industry practices.
Under the new approach, SPRC will allocate one-third of its total extra maintenance-related expenditures (US$120–150 million) to operating expenses (OPEX), recorded in the profit and loss statement, and the remaining two-thirds to capital expenditures (CAPEX).
This adjustment is expected to lead to approximately US$50 million in OPEX and US$100 million in CAPEX. Notably, 50% of the OPEX was already recognized in the first nine months of 2025, with the remaining US$10 million and US$15 million to be booked in the fourth quarter of 2025 and the first quarter of 2026, respectively.
Consequently, KGI has lowered its assumptions on SPRC’s SG&A expenses by 10% to THB 3.7 billion for this year and by 27% to THB 4.0 billion for next year. This revision has prompted upgrades to KGI’s earnings estimates for SPRC by 15% in 2025 to THB 2.5 billion, and by 28% in 2026 to THB 4.6 billion.
Looking ahead, KGI forecasts stronger core earnings for SPRC in the fourth quarter of 2025, driven by a significantly wider refinery margin. The company’s market gross refining margin (GRM) is projected to exceed US$8.0 per barrel for the quarter—up more than 48% quarter-on-quarter—supported by strong gasoline, jet oil, and diesel spreads.
Notably, jet oil and diesel margins have remained robust, aided by Russia’s partial ban on diesel exports through year-end, heightened seasonal demand for diesel, and U.S. sanctions on major Russian energy firms.
In terms of operational efficiency, SPRC management has also announced plans to shorten its upcoming refinery maintenance shutdown from 30 days to 24 days, providing further upside to investor sentiment.
Following these developments, KGI Securities raises its 2026 target price for SPRC to THB 8.00 per share from the previous THB 7.00, maintaining its ‘Outperform’ rating based on an unchanged EV/EBITDA multiple of 4.5x. The earnings upgrade, improved core profit outlook, and the positive change in accounting policy all contribute to a more optimistic view of SPRC’s prospects.
