Ms. Thorsang Chaiyaprawat, Financial Planning Manager of Thai Oil Public Company Limited (SET: TOP), expressed optimism about the business direction this year.
She noted that the refinery business is expected to remain stable or move slightly compared to last year due to the introduction of new supply in the market.
Meanwhile, the petrochemical business, especially in the paraxylene (PX) market, is experiencing improvement and growth, though benzene (BZ) remains challenging.
Crude oil prices this year are anticipated to stabilize or decline slightly compared to last year, owing to continuous influxes of non-OPEC crude supply and overall global economic fragility. Additionally, Crude Premium has risen due to U.S. sanctions against Russia’s oil industry, increasing demand for Middle Eastern crude oil.
The refining margin is expected to see increased demand for diesel and jet fuel from 4Q24. While 4Q24 saw a rise in Singapore’s refining margin, this year it is anticipated to slightly decrease due to demand pressures amid global economic uncertainties.
The three key factors to watch this year include: firstly, President Donald Trump’s anticipated stringent policies and China’s increased tariffs on U.S. goods, potentially escalating trade wars and pressuring global economic growth, including oil demand.
Secondly, U.S. sanctions on Russian and Iran oil tightening supply, prompting China and India to temporarily source crude elsewhere. Thirdly, an increase in non-OPEC crude supply, primarily from U.S. production and new projects in Brazil and Canada, which might lead OPEC-plus to reassess production increases to maintain market balance.
The Clean Fuel Project (CFP) recently received shareholder approval on February 21st for additional investment of THB 63,028 million (approximately $1,776 million) with interest of around THB 17,922 million (approximately $505 million).
The total investment value of CFP is approximately THB 241,472 million (approximately $7,151 million) with construction interest of about THB 37,216 million (approximately $1,078 million).
However, post COD, operating cash costs are expected to increase from the current 2.5 USD to 4.8 USD partly due to CFP expenses and interest rates, though the return on investment remains favorable.
Regarding CAP investment, CAP has signed an EPC contract with PT Inti Kaya Persada Tehnik (IKPT) to increase production capacity of the Butene-1 (B1) and MTBE plants by 25% to strengthen CAP.
Yuanta Securities (Thailand) noted that the Marine Department approved TOP to resume testing the offshore SBM pipeline following a leak that started in September 2024, with two cargoes transported since. Official resumption is expected in Q3 this year.
Overall, 1Q25 trends have declined compared to last year and remain unimpressive compared to the previous quarter, influenced by spread direction and Crude Premium.
The market has already absorbed 1Q25’s direction, with current stock prices deemed inexpensive at a PBV of 0.3 times. The short-term positive factor includes SBM resumption progress, leading to a “Buy” recommendation with a target price of THB 31 per share.
