• 
• 

Published on February 14, 2008

Although PTT has to pay pipeline rental fees throughout its remaining 24-year concession period, brokerage houses expect a bright outlook for the company's performance this year.

Ayudhaya Securities (AYS) expects PTT's net profit to be Bt101 billion, up 4 per cent from the previous year, due mainly to the profit adjustment of its subsidiaries and joint-venture companies such as PTT Exploration and Production (PTTEP), Thai Oil, PTT Chemical, and PTT Aromatics and Refining.

AYS estimates that PTT has had to pay pipeline rental fees of Bt191 million between October 2001 and 2007, while the company must pay about Bt343 million on average each year until 2031.

Kim Eng Securities (Thailand) expects PTT to achieve ongoing earnings growth to Bt101.31 billion this year, on the back of positive factors. These include 13-per-cent year-on-year growth in natural-gas sales volume, the flotation of the liquefied-petroleum-gas price, higher olefins prices and an extra gain from the listing of the 36 per cent-owned Star Petroleum Refining.

The broker expects natural-gas sales to average 3.284 billion cubic feet per day for an increase of 7 per cent year on year and slightly lower than the previous quarter due to seasonal effects. The broker estimates the average gross refinery margin of the PTT Group, including profit and loss from oil inventory, at US$10.50 (Bt345) per barrel, with a profit from oil inventory at between $3 and $4 per barrel.

AYS expects PTT to report a net profit of Bt23.5 billion for the fourth quarter. The figures represent a 4-per-cent quarter-on-quarter drop, but a 51-per-cent increase year on year.

Kim Eng foresees fourth-quarter net profit of Bt24.22 billion, up 56 per cent year on year. Without extraordinary items - such as foreign-exchange gains, a gain on the sale of stakes in PTT Chemical, PTTEP and Thai Oil totalling Bt5 billion and a provision for pipeline rental fees for the past six years, plus interest at 7.5 per cent and a pipeline transfer tax of Bt3 billion - the company will record a normalised profit of Bt22.06 billion, up 61 per cent year on year.

The key earnings driver is still growth in the natural-gas business, PTTEP and higher earnings contributions from the refinery and petrochemical businesses, the broker reported.

PTT shares closed at Bt330 on the Stock Exchange of Thailand yesterday, up Bt6 on the day.

Meanwhile, Tisco Securities said in its research that the weakening US economy and hence oil demand had resulted in higher oil inventory and a risk of oil-price correction could hurt PTTEP's outlook in the short term. Thes concern about a potential oil-price correction could cap the performance of the unit's share price in the short term.

The broker said that according to an analysts' meeting, PTTEP said negotiations over profit-sharing for the M9 project in Burma were continuing.

The company had hoped to reach an agreement by the end of last year but admitted that talks with the Burmese government were taking longer than expected. The M9 offshore field could boost PTTEP's volume growth by 20 per cent.

With the gas sales agreement for M9 expected to be completed in 12 months, Tisco has added a conservative 15-per-cent premium to the target price, raising it to Bt184.

The Nation