Indorama Ventures Public Company Limited (SET: IVL) drew contrasting assessments from brokers after reporting third-quarter 2026 net profit of Bt2.2 billion, with improving leverage and prospects for stronger PET spreads weighed against operating pressures.
CLSA and Kiatnakin Phatra Securities (KKPS) retained positive recommendations, while Morgan Stanley remained Underweight, citing earnings shortfalls and persistent challenges. CLSA maintained Outperform with a Bt32 target price, KKPS kept Buy with a Bt31.10 price objective, and Morgan Stanley assigned a Bt19 target.
CLSA said reported earnings per share reached Bt0.35. Net profit fell 64% from the preceding quarter but reversed a Bt818 million loss a year earlier. The broker attributed the sequential weakness to a return to more normal operating conditions and declining crude prices, with EBITDA and its margin retreating from their second-quarter peak.
Meanwhile, KKPS highlighted third-quarter core net profit at Bt2.4 billion after excluding impairments and other exceptional items, down from Bt9.16 billion in the previous quarter. Nevertheless, core earnings for January–September reached Bt9.83 billion, compared with a Bt2.56 billion loss a year earlier, supported by recovering PET spreads and internal improvement measures.
Balance-sheet indicators strengthened despite the earnings decline. Net debt/EBITDA dropped to 4.7 times from 5.3 times in the second quarter, according to CLSA. KKPS noted that the ratio had stood at 7.6 times at the end of 2025.
Over the same nine-month period, net debt/equity decreased from 1.83 times to 1.52 times, while inventory turnover rose from 4.7 times to 5.25 times. KKPS linked the progress to debt reduction, portfolio optimisation and tighter inventory management.
PET profitability matched Morgan Stanley’s expectations, with asset utilisation at 78%. The broker identified US integrated PET as the only meaningful growth driver, supported by a wider spread between oil and Henry Hub gas prices. It highlighted high returns on capital employed and EBITDA running at twice mid-cycle levels.
KKPS’ segment review showed integrated PET EBITDA at Bt4.9 billion, with weaker spreads and the absence of inventory gains weighing on the quarter. PET sales volumes fell 8% sequentially to 1.76 million tonnes.
China’s integrated PET spread narrowed by $103 a tonne from the second quarter to $176, although it remained above US$116 a year earlier. KKPS attributed the sequential contraction to seasonal factors. IVL said inventory gains had contributed one-third of the Bt4.7 billion quarter-on-quarter increase in PET EBITDA in the second quarter.
Elsewhere, intermediate chemicals EBITDA increased to Bt3.34 billion from Bt3.1 billion. Higher MEG earnings outweighed weaker MTBE performance: MEG volumes recovered following a planned second-quarter turnaround, and its spread widened by $55 a tonne to $542.
MTBE faced a US$21-a-tonne spread decline and lower volumes after the US driving season ended. Intermediate chemicals sales volumes overall decreased 7% to 0.29 million tonnes.
Reliability problems continued at the US cracker, IVOL. Although corrective measures had been introduced, KKPS said significant improvement was not yet evident.
Specialty chemicals EBITDA dropped 62% to Bt418 million amid narrower PIA margins and a maintenance shutdown. Packaging EBITDA declined 22% to Bt1 billion, reflecting a 6% volume reduction and lower earnings per tonne.
Indovinya, the surfactants business, delivered Bt4.24 billion in EBITDA, down 10%, despite a 15% increase in volumes to 0.38 million tonnes. LAB operations underwent maintenance, while KKPS also considered weaker US cracker margins a likely drag.
The fiber business generated EBITDA of Bt924 million, a 51% sequential decline despite 10% volume growth. China polyester spreads narrowed by $22 a tonne to $106, and second-quarter inventory gains did not recur.
Morgan Stanley said net profit and debt reduction fell short of its estimates by about 25% and 6%, respectively. It cited expensive European energy, subdued fiber demand and continued high growth investment.
Europe accounts for approximately 26% of IVL’s book value. While management acknowledged the regional difficulties, Morgan Stanley said further action was necessary to lift profitability beyond breakeven. It welcomed the focus on asset rationalisation and reducing net debt but expected a difficult path ahead.
CLSA forecast stronger fourth-quarter earnings, pointing to quarter-to-date integrated PET spreads of $220 a tonne, against $179 in the third quarter. It also expected a quarterly dividend announcement of Bt0.20 a share during the week of its report.
Additionally, KKPS’ Buy recommendation rested on anticipated net profit recovery in 2026–2027 and a 2026 forecast price-to-book ratio of 1.0 times, below the 1.6-times historical average for 2011–2025. It argued that improving financial ratios and a PET recovery supported a valuation re-rating and should ease balance-sheet concerns.
