Kiatnakin Phatra Securities (KKPS) noted in its report regarding PTT Public Company Limited (SET: PTT) that the company has initiated its inaugural share repurchase program, planning to acquire up to 470 million shares, constituting 1.65% of its outstanding shares. The initiative, slated to run between March 24 and September 23, encompasses a budget of THB 16 billion.
Aimed at enhancing return on equity (RoE) and earnings per share (EPS) while managing excess liquidity, PTT will subsequently decide on the timeframe to redistribute or possibly cancel the repurchased shares, which could range from three months to three years post-program completion.
The analyst interpreted this repurchase program as part of PTT’s broader strategy to refine capital allocation discipline. Previously, the company increased its dividend payout ratio, which is set at 67% for 2024, a notable rise compared to the 55% and 61% ranges over the past few years.
PTT remains committed to stable dividend payments, ensuring robust shareholder returns. Supported by a solid business strategy and a conservative five-year investment approach, the company asserts its capacity to sustain competitive dividend yields. KKPS saw these efforts as evidence of PTT’s enhanced capital allocation discipline, aiming to optimize shareholder returns amidst slow profit growth.
The analyst pointed out that amid global energy price fluctuations in 2022, driven by interruptions in Russian energy supplies, a peace deal with Ukraine might restore some oil and gas flows, potentially decreasing global gas prices. Additionally, increased U.S. LNG exports could further mitigate prices.
Declining global gas/LNG prices are expected to reduce Thailand’s pool gas price, potentially enhancing the margin profile of PTT’s gas group, including its GSP/S&M and NGV units that rely on this feedstock.
Following these developments, KKPS upholds a ‘Buy’ recommendation for PTT with a target price of THB 40 per share, pointing to its compelling valuation, substantial dividend yield, and improved capital allocation discipline as key factors.
Moreover, the analyst also forecasted PTT’s net profit to reach THB 112.30 billion in 2025, THB 122.55 billion in 2026, and THB 126.29 billion in 2027.
