IRPC Public Company Limited (IRPC) reported a net profit of 5,581 million baht in 1Q21, compared to a loss of 8,904 million baht in 1Q20. Market GIM increased 24% on a quarterly basis to US$13.7/bbl as spreads on the majority of products increased to offset the higher crude premium, together with the tight supply from maintenance shutdown of Lube base oil plants across Asia. Market GRM (Refinery & Lube) increased by 49% on a quarterly basis to US$5.2/bbl, the increase was primarily due to economic recovery and commodity demand remained flat. Market P2F was US$7/bbl as demand for petrochemical products, especially olefins and styrenics, remained strong.
For 2Q21, Kingsford Securities expected IRPC’s earnings to decline QoQ due to lower margins from stock gains. However, overall profit is expected to increase both QoQ and YoY. The spread of petrochemical products will be supported by strong demand. Furthermore, due to a reduction in maintenance shutdown, the refining rate would increase to 200 KBD in 2Q21. All business units’ market GIM would be as high as US$13-14/bbl.
Meanwhile, due to increased demand from the RAPID project in Malaysia, IRPC’s performance in 2H21 could slow down. However, based on an expectation that market GIM will rise to US$12.5/bbl, IRPC is estimated to post a full-year net profit of 7.3 billion baht, a substantial improvement from a net loss a year earlier.
Lastly, Kingsford suggested a “Speculative-Buy” on IRPC with a target price of ฿4.60/share, based on a 1.15x PBV multiplier and a 9% upside. The possibility of inclusion in the SET50 continues to be a positive factor for IRPC.