Editor’s Picks, stock news 1:52 pm 2024-03-25
Star Petroleum Refining Public Company Limited (SPRC) expects 1Q24 performance to return to profit, with turnover from 4Q23 to a heavy loss. The main supporting factor comes from the recovery of refining profits. Also, the price of crude oil continued to rise. An opportunity to profit from oil stocks Moreover, during the 2nd quarter of 2024, it is expected to continue to grow. as GRM stands tall due to tight supply
This morning, SPRC shares moved at 8.70 baht, the price unchanged.
Mr Parin Nikornkittikosol Assistant Director The investment analysis department of Yuanta Securities (Thailand) said that SPRC’s 1Q24 operating results are expected to turn around to a profit (Turnaround) from 4Q23 which had a net loss of 4.6 billion baht due to the Loss of large amounts of oil stock
But the first quarter of 2024 was supported by a recovery in Singapore’s refining margin. Year-to-date (YTD), Singapore’s average refining margin was 7.6 USD/barrel, up 38% QoQ, resulting in better margins at the SPRC refinery, leading to better product prices, while the Crude Premium in 1Q24 fell to around 2.2 USD / barrel. Compared to the 4th quarter of 2023, oil costs fell.
Crude oil prices continue to improve. As seen from the beginning of last year, the average price of WTI crude oil was around 70 USD / barrel. But currently it has increased to around 82 USD/barrel. Evaluate the opportunity to turn a profit on oil stocks in the first quarter of the year.
As for domestic oil demand, it remains good. As for supply, competitors have shut down for maintenance at some refineries, making it expected that SPRC will have a better production yield rate.
Regarding the operating direction in the 2nd quarter of 2024, it is still expected to grow well from the first quarter. This is because Singapore’s refining frontier is still at a good level. From Russia, which suspended gasoline exports for 6 months starting March 1 in order to stabilize oil prices. and Ukrainian drone attacks on Russian oil refineries have led to reduced oil refining capacity and loss of supply. But at the same time, demand for gasoline will accelerate as the US Driving Season approaches from Memorial Day (May). to September.
SPRC is the refinery that benefits from the highest gasoline crack spread with a 25% higher yield than competitors.
At the same time, in the middle of this year, SPRC should have the opportunity to resume operation of the SPM pipeline, which should reduce transportation costs by about 1-1.5 USD / barrel. And it is expected to start recognizing the operating results of Caltex gas stations, which are expected to increase profits by 300 million baht a year.
So, keep the forecast for Turnaround 2024 to be a net profit of 3.9 billion baht, a turnover of 2023 net loss of 1.2 billion baht, adjust the recommendation up to “Buy”, target price 10.40 baht, it still has many advantages . .
Mr. Sornchai Pittayaphruek, Senior Analyst Krungsri Patanasin Securities Energy and Petrochemical Group considers SPRC to be the most outstanding among refineries. From the trend of the 1st quarter of 2024, it turned back to profit from a heavy loss of the 4th quarter of 2023, supported by the recovery of crude oil prices. Based on the price of Brent crude oil (BRENT), rising to a 4-month high from December at around 71 USD/barrel, West Texas crude also rose. It is expected that there will be profits from oil stocks.
In addition, the refining margin in the 1st quarter of 2024 (QTD) also increased. as a result of unplanned maintenance shutdowns of refineries in the United States and reduced supplies in the Middle East. Including Ukraine’s heavy use of drones to attack Russian oil infrastructure. As a result, supply is tight and the Crude Premium is improving.
Krungsri Patanasin still recommends “Buy” with a target price of 10.50 baht, seeing it as the most outstanding stock in the refinery sector in the first quarter and there is a chance that the stock price will recover from its low base.
KGI Securities said in its analysis that 1Q24 refinery business profits are expected to have a turnaround trend following an increase in refining profits and oil prices. (Opportunity to convert stock profits) and hopefully the April profit rate will improve further. If the deep sea single point berth (SPM) can be reconstructed, this will reduce crude oil transportation cost by 1.5-2.0 USD/barrel, while the valuation is not expensive Forward PE is low Only +/- 5.5 work and it is expected that this year’s Dividend profit will pay as high as >10%.
By InfoQuest News Agency (25 Mar. ’24)
Tags: Consensus , SCOOP , SPRC , Parin Nikornkittikosol , Puro Star Petroleum , Thai stocks
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