JP Morgan has upgraded PTT Oil and Retail Business Public Company Limited (OR) to an overweight rating, raising its target price from 21 baht to 26 baht, reflecting a 23% upside.
The upgrade is driven by Thailand’s recovering tourism sector and OR’s 14-billion-baht investment to expand Café Amazon branches and introduce bottled coffee into 7-Eleven stores nationwide. Additionally, JP Morgan expects the company’s Q1 2023 results to be profitable, with marketing margins rebounding strongly to 1.80–1.85 baht per liter, compared to the previous quarter’s 1.30 baht per liter.
According to Disathat Panyarachun, Chief Executive Officer of OR, the company has allocated an investment budget of 31.2 billion baht, with a strong focus on strengthening the Lifestyle Business Group’s value chain. Nearly 45% of this budget, or 14.2 billion baht, is dedicated to Café Amazon’s expansion.
Kasikorn Securities views JP Morgan’s overweight rating, along with growing oil service consumption and rising marketing margins, as positive factors for OR’s 2023 financial performance. First-quarter earnings are projected to grow by 10% to 15% compared to last year. Kasikorn has set a target price of 25.50 baht for OR shares.
Additionally, OR’s collaboration with Boonrawd Brewery to introduce three varieties of bottled coffee is expected to be beneficial. However, as the product is new to the market, its performance will be reassessed over time.
