Morgan Stanley rated Star Petroleum Refining Public Company Limited (SET: SPRC) with a buy recommendation, setting a target price of Bt12.90 per share as the company’s second-quarter earnings surpassed the analyst’s projections by 10%. Notably, SPRC generated free cash flow equivalent to nearly one-third of its market capitalization amid strong refining performance.
SPRC announced an interim dividend of Bt0.5 per share, marking a threefold increase compared to the previous year. This dividend represents 15% of its first-half 2026 profits, in contrast to a Bt0.45 per share payout for the entirety of 2025.
Looking ahead, Morgan Stanley anticipates further growth in the second half of 2026. The company reported a gross refining margin (GRM) of US$23.7 per barrel in 2Q26, placing it in the top quartile globally. The firm projects that a sustainable margin of US$15-16 per barrel is likely as demand for diesel and gasoline remains robust.
SPRC’s crude sourcing showed increased flexibility, utilizing Chevron’s network. Oil supply from the Middle East decreased to 54% of total input, down from 79% in the previous quarter, with higher contributions from West Africa (20%) and North America (7%).
Operational expenses fell 22% year-on-year to US$1.74 per barrel, and further decreases are expected as the SBM (Single Buoy Mooring) initiative commences. Refinery utilization rates stood at 85%, limited by existing export restrictions.
Meanwhile, TISCO Securities expects SPRC to sustain strong earnings into the third quarter, as Singapore GRM has held firm at around $23.4 per barrel so far, a slight increase from the previous quarter. This is seen as sufficient to offset high crude premium costs and the government’s diesel margin cap. The company reported maintaining a healthy market GRM in July.
Additionally, SPRC announced an interim dividend of THB 0.50 per share, which TISCO highlights as a positive catalyst for the stock. The dividend yield is 4.4% and represents 44% of the firm’s forecast for the full-year payout. Notably, the interim dividend surpasses the full-year 2025 dividend.
TISCO maintains a Buy rating with a target price of THB 12.50, but notes potential risks linked to refining margin volatility, crude price pressures, regulatory changes, and utilization rates.
