2023-09-18 04:40:01
Stock Dimension-PTT by the Research Department of CGS-CIMB Securities views that PTT may be at risk. If the government asks to help relieve the burden of energy prices According to the new government’s populist policy Therefore downgraded the recommendation to “Hold” from “Buy” with a target price of 36 baht.
In the case where the Cabinet approves the reduction of electricity prices for the September-December 2023 period by 0.35 baht/unit to 4.10 baht/unit, while the Energy Minister stated that will reduce gas costs by holding the pool gas price to no more than 305 baht/mmbtu. CGS Research sees that PTT may have to bear the difference between the actual gas cost and the price ceiling. And it is not yet clear whether PTT will receive compensation for such expenses or not.
In this case, PTT does not receive the said compensation. CGS Research Department expects that the impact on PTT’s EBITDA in 2023 will be approximately 14.8 billion baht.
While in the case of the Energy Regulatory Commission Proposing to use the price mechanism “Single Pool Gas Price”, the research department views that using Single Pool Gas Price will reduce electricity producer costs by 23 USD/mmbtu. And it is expected that PTT’s EBTIDA will be lost approximately 26.6 billion baht in 2024. In this case, PTT may have to adjust the ethane sales price in the contract with PTTGC in order to jointly bear the increased costs.
As for the case where the Cabinet approves fixing the retail price of LPG gas at 423 baht/unit in October-December. 66 subsidies for such measures It will come from the fuel fund. Therefore, there will be no financial impact on PTT. However, the possibility that the government may ask PTT to subsidize LPG prices for domestic users cannot be excluded. If the financial condition of the Oil Fund worsens This may increase the risk to PTT’s operations.
CGS Research Department Therefore, we downgraded our recommendation on PTT shares to “Hold” from “Buy” with a target price of 36 baht, seeing a high risk that the government may ask PTT to subsidize populist measures during a time when the country’s public debt is rising, with upside risk coming from Imported gas costs are lower than expected. Downside risk will come from lower-than-expected domestic gas demand.
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