4Q24: Beats, with turnaround QoQ
TOP reported 4Q24 net profit of Bt2.8bn, above market and INVX estimates on stronger market GIM, which boosted net operating profit 188% QoQ to Bt3.4bn. Profit was also aided by a lower stock loss of Bt2bn (US$2.1/bbl) vs. Bt5.4bn (US$5.4/bbl) in 3Q24. This gave 2024 net profit of Bt10bn, falling 49% on unfavorable market GIM of only US$7/bbl (-29%) and a larger stock loss. We expect 2025 core profit to grow 20% on lower stock loss and an increase in market GIM despite the 30-day major turnaround of the largest CDU in 3Q25. We slice our TP (end-2025) from Bt31 to Bt28/share, based on 0.4x PBV (2025F) and keep our Neutral rating despite the recent fall in share price. We believe the market is likely to stay cautious until CFP is back on track and the startup date is more certain.
Crude run stable QoQ. TOP continued to maximize crude run in 4Q24 at 113% (flat QoQ) to benefit from the improved market GRM. Total intake remained high at 314kbd although the main crude offloading facility, SBM-2 remained offline. Management is confident that this facility will resume normal operations in the near future. The high crude run helped keep unit cost low in 4Q24 at US$2.5/bbl, though this was up 32% QoQ due to cost actualization in the year’s final quarter.
Higher GIM, driven by oil refinery. Market GIM was US$7.1/bbl up 32% QoQ on an 38% QoQ rise in GRM and a 120% QoQ rise in lube base oil margin; aromatics margin fell 17% QoQ on weak PX spread (-36% QoQ). With a lower stock loss of US$2.1/bbl (vs. US$5.4/bbl in 3Q24), accounting GIM increased sharply from nil to US$5/bbl. This was above cash cost of US$3.1/bbl (opex US$2.5/bbl + finance cost US$0.6/bbl).
More loss contribution from CAP and ethanol business. Profit contribution from other businesses increased 9.5% QoQ, most from power and solvent businesses, as olefins (CAP) and ethanol continued to report losses in 4Q24.
1Q25 outlook uncertain. Despite abnormally cold weather in 1Q25, average Singapore GRM YTD is down 51% to US$2.46/bbl against the 5-year average of US$5.37/bbl for first quarter. We believe this reflects a sharp and rapid increase in crude oil price due to market concerns that sanctions against oil from Russia and Iran will impede oil flow, concurrent with lagging refined oil product price adjustment. The situation has improved recently with GRM rising to >US$4/bbl. We expect market GRM to gradually pick up pace to reflect higher crude cost and seasonal demand as sentiment remains positive on the back of recovery of gasoline crack spread. We expect TOP to maintain maximum crude run in 1Q25 at 112-113% although the crude run for full-year 2025 could drop to 107-108% due to a planned maintenance shutdown of CDU-3 (180kbd) in 3Q25. The most recent shutdown was in 2019.
TP is cut to Bt28; maintain Neutral. Our TP (2025F) is cut from Bt31 to Bt28/share, based on -2SD PBV multiple of 0.4x, implying EV/EBITDA (2025F) of 9.2x. There is no near-term catalyst while the persistent risk of CFP delays and cost overruns will undermine investor appetite. We see the uncertainty over CFP as an overhang for share price in the near term and maintain our Neutral rating.
Key risks: Volatile oil price and GRM, weaker oil price causing inventory loss and lower demand for aromatics. Other risks are potential delays in CFP startup and cost overruns. Key ESG risk factors include the environmental impact of its business and GHG emission regulatory changes.
