PTT Global Chemical Public Company Limited

Overview Key strengths Key risks Margin stability in olefin and polyolefin operations backed by feedstock agreement with the parent. Growth appetite increases the likelihood of higher investment spending over the next two to three years. Dominant market position in a variety of chemical products in Thailand. Recent acquisition weighs on the company's balance sheet. Solid free cash flow generation through the industry cycles High crude oil prices may erode petrochemical margins We forecast GC?s adjusted EBITDA at Thai baht (THB) 50 billion-THB60 billion annually in 2022 and 2023, compared with THB62.5 billion in 2021. The weakening earnings trend is driven by high crude oil prices, which will likely narrow global petrochemical spreads in the next one to two years. Spreads

...PTT Global Chemical Public Co. Ltd.'s (GC) earnings may slightly soften in 2022 due to a squeeze on petrochemical margins. We forecast GC's adjusted EBITDA at Thai baht (THB) 50 billion-THB60 billion annually in 2022 and 2023, compared with THB62.5 billion in 2021. The weakening earnings trend is driven by high crude oil prices, which will likely narrow global petrochemical spreads in the next one to two years. Spreads for both polyolefins and aromatics will also be suppressed by capacity additions in Asia-Pacific, most of which will come from China, India, and Malaysia. For GC, risks in the petrochemical business will be partially offset by favorable refining margins; refining segment accounts for about 10% of the company's EBITDA. In addition, GC's exposure in specialty chemicals through its acquisition of Allnex Holdings GmbH in 2021 will add some diversity and mitigate some downside risks from its...

Full Report