Mr. Suwat Sinsataka Managing Director FSS International Investment Advisory Securities Company Limited or FSSIA Stated in the analysis on May 27, 2022, said that at this time, we maintain a “buy” recommendation on the stock.Esso (Thailand) Public Company Limited or ESSO With a target price of Bt12.9 and raised to be a top refinery stock, ESSO has the strongest earnings growth prospects among the six Thai refineries and will not record a loss on oil price hedging ( hedging), which will enable them to take full advantage of the rising GRM. ESSO also plans to increase its sales volume.
The ESSO management team said that the three main factors that will support this year’s earnings are: 1. ESSO will not have oil price hedging. Like other refineries in Thailand, this will enable the company to fully benefit from the rising refining costs. 2. ESSO plans to expand its production capacity to more than 80% in the second quarter due to the closure of the Aroma plant. tics in June 2021, enabling the company to produce more gasoline and 3. ESSO is committed to Both in the gas station business, trade and exports due to the high refining margin. As a result, the production rate of ESSO’s refinery is 80-85%.
FSSIA forecasts ESSO’s GRM of USD15-17/bbl in Q2, up from USD9/bbl in Q1, as a key driver. is a significant increase in gross margins for gasoline (28% Yield in 1Q22), diesel (46%) and jet (3%), as ESSO was able to increase gasoline output by 30%, diesel added. up 48-50% and jet fuel up 5%, coupled with an increase in capacity utilization rate 82-85% qoq (145-150kbpd), up from 70% (137kbpd) in Q1. FSSIA therefore expects ESSO’s core earnings from refineries to be Bt3-4bn in Q2, up from Bt1.5bn in Q1.
In addition, ESSO plans to increase profitability in Q2 to Q4 by 1. Increasing the number of gas stations to 800 by the end of 2022 from 739 in Q1 2. Adding 450 more coffee shops. -500 locations in 2022 from 397 locations in Q1 and 3. Increase sales volume and refining rate through increased gas station sales volume 37.1% of total refinery production in Q1 trade 60 % and 2.9% export