Analysts are positive on the report that Thailand’s state-owned enterprise PTT Public Company Limited (SET: PTT) is looking for new partners for its petrochemical and refinery units, seeing it as a strategic move to improve the company’s business and competitiveness in the market.
It was reported earlier that PTT’s CEO Mr. Kongkrapan Intarajang, in his statement on PTT’s 2Q24 earnings performance, said on Tuesday that the company is in talks with potential investors to sell a portion of stakes in PTT Global Chemical, Thai Oil and IRPC, but will maintain majority stakes in those units.
According to the CEO, new partners will help improve operations of said units, which are facing high competition and tough market conditions. Moreover, Mr. Kongkrapan also mentioned that the company is looking to divest unprofitable businesses and units in an effort to boost profits.
Traders were quick to panic, sending share prices of the group company to plummet on Tuesday.
PTT Public Company Limited (SET: PTT) declined by 0.72% or THB 0.25 to THB 34.25, with a trading value of THB 1.03 billion.
PTT Global Chemical Public Company (SET: PTTGC) slumped by 3.67% or THB 0.90 to THB 23.60, with a trading value of THB 520.81 million.
Thai Oil Public Company Limited (SET: TOP) dropped by 2.35% or THB 1.25 to THB 52.00, with a trading value of THB 686.99 million.
IRPC Public Company Limited (SET: IRPC) decreased by 1.38% or THB 0.02 to THB 1.43, with a trading value of THB 25.56 million.
Bualuang Securities (BLS) expressed optimism in a recent note regarding PTT’s strategic partnership initiatives, emphasizing that the search for strategic partners has always been part of PTT’s considerations, not solely for the petrochemical and refinery sectors but for its overall business.
The firm added that the plan is still going and under talks whether it would cut stakes in its flagship company or subsidiaries of those flagship companies.
From a fundamental standpoint, BLS believes that reducing shareholdings in the hydrocarbon sector will propel PTT closer to achieving its net-zero goal by 2050. The firm also anticipates the possibility of a special dividend payout resulting from the divestment of unprofitable operations.
Kasikorn Securities (KS) also conveyed a positive outlook in a note, noting that the strategic partnerships are poised to enhance PTT’s core competencies and competitive edge in the medium to long term. Drawing parallels to the successful merger between Bangchak and Esso, the move is expected to fortify PTT’s negotiating power, potentially leading to cost reductions.
The acquisition of partners from the Middle East or the U.S. is highlighted as a strategic step to gain expertise in technology that can enhance production efficiency and overall performance. Additionally, this initiative could lessen market competition akin to the dynamics observed in other sectors like ADVANC and TRUE, potentially allowing for marginal increases in selling prices.
