Net loss of Bt1.7bn was less than INVX estimated on lower SG&A expenses. Behind the poor earnings was a huge stock loss of US$5.2/bbl or Bt1.8bn (net of gain from oil price hedging). This pulled accounting GRM down to -US$3.6/bbl, and operating GRM to only US$1.6/bbl, discounted to Singapore GRM due to a higher proportion of gasoline. 9M24 earnings were in the red to the tune of Bt659mn and we thus cut our forecast to a net loss of Bt275mn from net profit of Bt2.4bn despite the better outlook for 4Q24. We also cut TP from Bt7.30 to Bt7 based on 0.8x PBV (2025F), implying EV/EBITDA of 7.3x. Still Underperform.
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BSRC – 3Q24: Hurt by weak GRM and stock loss
Crude intake down QoQ due to planned shutdown. BSRC’s crude run fell 11% QoQ to 137kbd (79% utilization), but still rose 28% YoY to accommodate demand from BCP petrol stations. Behind the QoQ drop in crude run was the 22-day turndown of its refinery for planned maintenance, timed to the poor market GRM and low season for the domestic market. Marketing sales volume fell 7% QoQ, though grew 16% YoY. Rebranding service stations to Bangchak continued and had reached nearly 90% of target (656 of 745 stations nationwide) by end-Sep.
Accounting GRM weakened QoQ on stock loss. Operating GRM fell 41% QoQ to US$1.6/bbl on a 15% QoQ drop in gasoline crack spread. This product accounted for 32% of total sales volume in 3Q24, higher than local peers at 25-27%, reflecting synergy with BCP, which optimizes product yield of both refineries to accommodate domestic demand. Accounting GRM turned to a minus US$3.6/bbl on a net stock loss of US$5.2/bbl (net of gain from oil price hedging of US$0.8/bbl). Marketing margin edged up to Bt1.02/liter from Bt0.86/liter on an effort to increase asphalt sales.
Profit to improve QoQ in 4Q24. In 4Q24, we expect stronger GRM on higher seasonal demand for middle distillates (diesel and jet fuel) and lower negative impact from stock loss. Crude run will rise QoQ after the 3Q24 planned shutdown to accommodate higher sales at BCP service stations. Sales volume in the Thai market is expected to recover in 4Q24 due to greater travel in 4Q and off the low base in 3Q24 caused by widespread flooding. Pressure on marketing margin may ease, given low oil price and the government’s intention to reduce intervention in domestic retail price for diesel.
Earnings forecast and TP cut. Although we expect earnings to recover in 4Q24, the 9M24 net loss of Bt659mn caused by stock loss was worse than expected. We therefore cut our 2024F to a net loss of Bt275mn from a net profit of Bt2.4bn to reflect the stock loss in 3Q24 and weak GRM in 9M24. We continue positive on the synergy with BCP, which will materialize further in 2025F. The revision cuts TP from Bt7.30 to Bt7, based on 0.8x PBV (2025F), -2SD of 5-year average. This implies 7.3x EV/EBITDA.
Key risks: Economic slowdown would hurt demand for refined oil products and GRM while oil price volatility would cause more stock loss. Other risks are regulatory changes on GHG emissions and government cap on domestic prices.