Kasikorn Securities (KS) has maintained an “Outperform” recommendation for Thai Oil Public Company Limited (SET: TOP), following the company’s robust financial results for the first quarter of 2026.
TOP reported a net profit of THB 19.5 billion, with earnings per share (EPS) of THB 8.72, representing a dramatic year-on-year increase of 456% and a quarter-on-quarter rebound of 693%. The result exceeded KS’ forecast by 8%—approximately THB 1.4 billion—though it was in line with the broader market consensus.
KS attributed the profit outperformance to several key factors. Firstly, the overall gross margin was about $0.5 per barrel higher than expected, due mainly to a stronger performance from the aromatics business, despite a slight decline in product-to-feed (P2F) margins and lower refinery utilization rates.
Secondly, interest expenses were lower than forecast by around THB 200 million, totaling THB 683 million—a 4% decrease QoQ—even as working capital requirements increased. Thirdly, TOP benefited from favorable foreign exchange rates, contributing an additional THB 500 million to earnings, resulting in total FX gains of around THB 2 billion.
In 1Q26, TOP reported a refinery margin of $12.7 per barrel with refinery utilization at 113%. The company also realized a net inventory gain of THB 16.7 billion ($17.9 per barrel), consistent with KS’ expectations. These factors collectively drove TOP’s strong earnings growth in the first quarter.
Looking ahead, the company provided guidance for 2Q26’s post-government intervention refinery margin at $13.3 per barrel, expecting only a slight inventory loss. KS estimates this should yield a net profit exceeding THB 10 billion for the second quarter.
However, the outlook for the second half of 2026 is less optimistic. Management projects refinery margins to fall sharply in 3Q and 4Q26 following ongoing government fuel price interventions, down to just $1.4 and $6.9 per barrel, respectively. With estimated inventory losses of $12.8 and $6.8 per barrel in those quarters, KS forecasts that TOP will likely post net losses in both Q3 and Q4. This guidance does not factor in a potential operational risk—if the government restricts oil exports due to storage constraints, forcing refineries to cut production.
Based on these prospects, Kasikorn has maintained its target price for TOP at THB 52.7, offering investors a total shareholder return of 15%. However, KS advises against speculative buying above this target price, noting that profits appear to have already peaked in 1Q26.
