Thai Plastic and Chemicals looking strong, analysts say

Costs of raw materials rose slower than product prices in the period, according to several brokerage houses.

Trinity Securities said in its research that PVC prices had risen to US$1,300 (Bt43,377) a tonne. TPC's PVC gross profit margin had risen to about $500 a tonne, an increase of 37 per cent year on year and 32 per cent from the first quarter.

TPC has the capacity to produce about 500,000 tonnes of PVC a year from two plants in Rayong and Phra Padaeng district in Samut Prakan.

The company's gross profit margin has improved because it is less reliant on the Chinese market, which generates a low profit margin for the company. TPC has begun to export more to the Middle East, Turkey, New Zealand and Australia.

The broker forecast a net profit of Bt790 million for TPC in the second quarter, up 105 per cent from the same quarter last year and 15 per cent from the first quarter this year.

Trinity said the company would also benefit from the slow rise in the cost of ethylene dichloride, the main raw material for producing PVC. It said the situation should continue in the second half.

It expects TPC's net profit in the second half will be about Bt650 million per quarter.

KGI Securities, meanwhile, estimated TPC would post a net profit of Bt899 million in the second quarter, an increase of 134 per cent from the same period last year and 30 per cent from the first quarter.

It believes TPC's production costs decreased from the first quarter because it shut down its vinyl chloride monomer production line. This could save costs of more than Bt100 million in the second quarter.

Moreover, TPC's sales volume increased in the second quarter, thanks to expanded production capacity for PVC resin by 120,000 tonnes per year since the third quarter last year.

KGI expects TPC to pay a dividend of Bt0.50 per share for its operating results in the first half of the year, and Bt1.80 for the entire year.