The share price of Thai Oil Public Company Limited (SET: TOP) settled at a 2-month high last Friday at THB27.00 per share as the performance is in a recovering trend from its low, following the incident regarding the delay of its Clean Fuel Project (CFP).
Bualuang Securities (BLS) has upgraded its investment recommendation from “Hold” to “Buy” with a target price (TP) of Bt32, supported by three key factors:
1) Entering High Season for Refining Margins: The US driving season is set to commence from late May to early September as there is a continuous growth in demand for jet fuel. This year’s demand growth outlook surpasses the capacity from new refineries.
2) Trump’s Policy Favoring Fossil Fuels: Plans to revoke the EV mandate and stop unjust subsidies for electric vehicles. This will also eliminate regulations that restrict the sale of gasoline-powered vehicles. Therefore, the demand for gasoline is expected to grow in the medium term, supporting refining margins to maintain at levels of $4-5/bbl, which are close to the 5-year average.
3) Attractive Valuation: Currently, TOP is trading at Year End 2025 (YE25) Price to Book Value (PBV) of just 0.3 times and PBV/ROE of 0.04 times (compared to the SET average of 0.15 times). Even under a bear-case scenario, assuming average refining margins of US$3/bbl similar to the COVID-19 period, the PBV/ROE would still remain at only 0.04 times.
