Results Preview/ Company Update 27 April 2015

1 Please see disclaimer on last page

PTT Global Chemical PCL (PTTGC)

Out of the woods

► 1Q15 bottom line to reverse QoQ back to profit.

► Reviewed projection on low crude price conditions, but

expect a recovery going forward from now.

► New 2015 target price of Bt71.60. Recommend BUY.

1Q15 bottom line to reverse QoQ back to profit

We expect PTTGC’s 1Q15 bottom line to reverse back to a profit of

Bt5.5bn (-12% YoY) after recording a net loss of Bt4.9bn in 4Q14 as

we expect combined inventory losses from refinery business and

aromatic business to be only Bt1.60bn as opposed to the massive

Bt13.7bn loss posted in 4Q14. Apart from the inventory issue, normal

refining profit should recover 22% QoQ to Bt3.6bn driven by higher

GRM of US$5.9/bbl (+20% QoQ), following seasonal effect, with a flat

utilization rate. For the aromatic business line, we expect product-to-

feed profit to surge 84% QoQ to Bt3.6bn thanks to (1) higher refinery

utilization rate of 89% after maintenance shutdown in 4Q14 and (2)

benefit of declining condensate price with limited downside of

paraxylene price. However, we foresee a drop in olefins business

performance due to (1) 18% QoQ drop in HDPE price to US$1,188

per ton, depressing selling price and squeezing profit margin, and (2)

lower utilization QoQ of olefins plant from 101% to 96%.

Earnings forecast revised down to reflect lower crude prices

We have revised down our earnings forecast for PTTGC for 2015 and

2016 (See Table 3) to reflect lower crude prices, especially on the

olefins business line which the benefit of gas-based ethylene cracker

have been transposed to naphtha-based cracker. However, as we

believe that crude prices have bottomed out and will gradually

recover, along with a strong pickup in the HDPE market price greater

than the naphtha price (See HDPE-Naphtha price spread in Table 2)

caused by strong regional demand despite slowdown in China's

economy, we believe PTTGC’s performance has already bottomed

out and the benefit of huge gas-based olefins cracker would

progressively recover. Moreover, there are some positive factors for

the aromatic business line from the explosion at Dragon Aromatics

Company’s aromatics plant in China in early April, which has partly

absorbed the paraxylene oversupply situation, while there has been

a YoY slowdown in normal supply, which have supported Px price

spreads recently.

BUY

TP: Bt71.60

Closing Price: Bt63.25 Upside/downside +13.2%

Sector Petroch.

Paid-up shares (shares mn) 4,509

Market capitalization (Bt mn) 285,185

Free float (%) 51.07

12-mth daily avg. turnover (Bt mn) 689

12-mth trading range (Bt) 70.75/

49.00

Major shareholders (%)

PTT PLC

Thai NVDR

48.89

7.99

Financial highlights

Source: SETSMART, AWS

Thailand Research Department

Mr. Napat Siworapongpun

License, No. 49234

Tel: 02 680 5094

(Year to December) 2013 2014 2015E 2016E

Revenue (Btmn) 552,881 574,010 460,209 489,908

Norm. net profit (Btmn) 33,140 16,178 30,197 34,409

Extra items (Btmn) - -2,239 - -

Net Profit (Btmn) 33,140 15,036 30,197 34,409

EPS (Bt) 7.35 3.33 6.70 7.63

Norm. EPS (Bt) 7.35 3.59 6.70 7.63

Norm. EPS grow th (%) -3 -51 87 14

PE (x) 8.5 18.7 9.3 8.2

PBV (x) 1.2 1.2 1.1 1.0

DPS (Bt) 3.4 2.4 3.0 3.4

Div. Yield (%) 5.4 3.8 4.8 5.5

ROE (%) 14.4 6.3 12.1 12.8

Results Preview/ Company Update 27 April 2015

2 Please see disclaimer on last page

New 2015F target price of Bt71.60 with BUY recommendation

With our new forecast, we set a 2015F target price of Bt71.60 based on improvement

in EV/adjusted EBITDA multiple of 7.7x, which is an arithmetic mean level, from an

arithmetic mean – 1.0 S.D. of 7.0x previously as we believe PTTGC’s performance has

already bottomed out and is ready to take off with the new upward strength of the olefins

cycle. PTTGC’s current share price offer 13.2% upside to our target with 4.8% dividend

yield. We recommend BUY.

Table 1: PTTGC 1Q15 results preview

Source: SET, AWS estimate

Table 2: Regional petroleum & petrochemical product price spreads

Source: PTTGC

Unit: Btmn 1Q14 4Q14 1Q15 %QoQ %YoY

Revenue from sales and services 147,366 126,686 110,512 -13% -25%

COGS 137,646 128,354 100,987 -21% -27%

Gross profit 9,720 -1,668 9,525 n.a. -2%

EBITDA 11,019 -276 10,581 n.a. -4%

Net profit 6,296 -4,935 5,522 n.a. -12%

EPS (Bt) 1.40 -1.09 1.22 n.a. -12%

Gains (net NRV) on inventories -575 -13,692 -1,582

Market GRM (US$/bbl) 4.5 4.9 5.9

CDU Utilization rate 101% 101% 102%

Market P2F (US$/ton) 165 164 220

BTX utilization rate 91% 63% 89%

Olefins utilization rate 77% 101% 96%

Crude Naphtha

MOPJ

(USD/ton)

2012 109.08 17.76 19.06 -3.35 14.37 943 436 411 419 379 539 261

1Q13 108.19 20.26 19.61 -7.37 18.39 961 521 515 498 375 669 430

2Q13 100.78 15.33 16.81 -3.67 14.62 858 585 575 586 351 539 415

3Q13 106.30 16.96 17.32 -10.71 12.41 920 568 569 649 284 510 329

4Q13 106.82 17.32 17.71 -10.47 9.20 946 590 603 718 281 502 346

2013 105.52 17.47 17.86 -8.06 13.66 921 566 566 613 323 557 380

1Q14 104.46 17.01 17.80 -8.51 14.56 935 620 625 705 245 386 380

2Q14 106.13 14.29 16.04 -10.65 16.06 951 618 627 653 152 333 369

3Q14 101.45 14.50 14.43 -8.44 13.18 913 691 688 688 182 478 429

4Q14 74.40 17.71 15.99 -5.62 13.44 647 801 784 793 246 400 319

2014 96.61 15.88 16.06 -8.30 14.31 861 683 682 710 206 400 375

1Q15 51.89 17.08 16.29 -1.86 15.35 494 694 687 698 253 332 217

07/04/2015 55.13 13.77 14.19 -3.27 15.22 519 836 841 876 92 390 308

14/04/2015 58.83 13.38 13.59 -3.69 16.46 550 805 815 845 47 411 325

PeriodRefinery Segment (USD/bbl) Olefins & Polymers Segment (USD/ton) Aromatics Segment (USD/ton)

Jet-DubaiGO 0.05-

Dubai

Fuel Oil-

Dubai

Gasoline-

Dubai

HDPE-

Naphtha

LLDPE-

Naphtha

LDPE-

Naphtha

PX FECP-

Condensate

BZ Spot KR-

Condensate

MEG ACP-

0.65 Ethylene

Dubai

($/BBL)

Results Preview/ Company Update 27 April 2015

3 Please see disclaimer on last page

Table 3: Revision on profit forecast.

Source: AWS estimate

Income Statement

Unit: Btmn 2013A 2014A 2015E 2016E

Revenue from sales and services 552,881 574,010 460,209 489,908 COGS 500,673 543,647 415,481 442,545 Gross profit 52,208 30,363 44,728 47,364 SG&A 14,025 14,565 11,505 12,248 EBITDA 58,294 34,476 52,789 56,273 Adj. EBITDA 55,265 52,643 52,789 56,273 Extra item -2,239

Net profit 33,140 15,036 30,197 34,409 EPS (Bt) 7.35 3.33 6.70 7.63

Balance Sheet

Unit: Btmn 2013A 2014A 2015E 2016E

Assets Cash and cash equivalents 18,582 15,416 5,938 21,932 Account receivable & others 61,592 45,760 44,383 47,247 Inventories 50,238 35,762 35,513 37,826 Property, plant and equipment 231,249 231,209 241,855 236,734 Total assets 432,362 404,752 396,707 411,951

Liabilities

Trade accounts payable & others 53,455 31,888 36,211 38,569 Current portion of long-term debts 19,839 23,088 7,299 15,066 Debentures 52,878 48,696 47,720 44,920 Long-term loans 42,934 42,546 28,038 15,773 Total liabilities 187,128 162,876 135,470 130,094

Shareholders' equity

Issued and paid-up share capital 45,088 45,088 45,088 45,088 Share premium 36,978 36,978 36,978 36,978 Retained earnings 143,278 145,036 164,547 185,368 Total equity 245,233 241,876 261,237 281,857

Total liabilities and equity 432,362 404,752 396,707 411,951

New Previous %Chg.

2015F net profit (Btbn) 30.2 33.9 -11%

2015F EPS (Bt/share) 6.7 7.5 -11%

2016F net profit (Btbn) 34.4 36.6 -6%

2016F EPS (Bt/share) 7.6 8.1 -6%

CG Report

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Corporate Governance Report of Thai Listed Companies (CGR). CG Rating by the Thai Institute of Directors Association (IOD) in 2013.

Corporate Governance Report disclaimer

The disclosure of the survey result of the Thai Institute of Directors

Association (“IOD”) regarding corporate governance is made pursuant

to the policy of the Office of the Securities and Exchange Commission.

The survey of the IOD is based on the information of a company listed

on the Stock Exchange of Thailand and the Market for Alternative

Investment disclosed to the public and able to be accessed by a

general public investor. The result, therefore, is from the perspective of

a third party. It is not an evaluation of operation and is not based on

inside information.

The survey result is as of the date appearing in the Corporate

Governance Report of Thai Listed Companies. As a result, the survey

result may be changed after that date, Asia wealth Securities Company

Limited does not conform nor certify the accuracy of such survey result.

Score Range Number of Logo Description

90 – 100

80 – 89

70 – 79

60 – 69

50 – 59

Below 50

No logo given

Excellent

Very Good

Good

Satisfactory

Pass

N/A

BAFS EGCO IRPC KTB PTTEP SAT SIM TOPBCP GRAMMY IVL MINT PTTGC SC SPALIBTS HANA KBANK PSL SAMART SCB TISCOCPN INTUCH KKP PTT SAMTEL SE-ED TMB

AAV BIGC DELTA HMPRO NBC PJW SAMCO SVI TOGACAP BKI DRT ICC NCH PM SCC TCAP TRCADVANC BLA DTAC KCE NINE PPS SINGER TF TRUEANAN BMCL DTC KSL NKI PR SIS THAI TSTEAOT BROOK EASTW LANNA NMG PRANDA SITHAI THANI TSTHASIMAR CENTEL EE LH NSI PS SNC THCOM TTAASK CFRESH ERW LHBANK OCC PT SNP TIP TTWASP CIMBT GBX LOXLEY OFM QH SPI TIPCO TVOBANPU CK GC LPN PAP RATCH SSF TK UACBAY CNT GFPT MACO PE ROBINS SSI TKT VGIBBL CPF GUNKUL MC PG RS SSSC TNITY VNTBECL CSL HEMRAJ MCOT PHOL S&J STA TNL WACOAL

2S BEAUTY CSS IHL MFEC PPM SKR TBSP TSC ZMICOAF BEC DCC INET MJD PPP SMG TEAM TSCAH BFIT DEMCO IRC MODERN PREB SMK TFD TTCLAHC BH DNA IRCP MONO PRG SMPC TFI TUFAIT BJC EA ITD MOONG PRIN SMT THANA TVDAJ BJCHI ESSO KBS MPG PTG SOLAR THIP TWFPAKP BOL FE KGI MTI QLT SPC THREL UMIAKR BTNC FORTH KKC NC QTC SPCG TIC UPAMANAH BWG FPI KTC NTV RCL SPPT TICON UPFAMARIN CCET GENCO L&E NUSA SABINA SST TIW UPOICAMATA CGD GL LRH NWR SALEE STANLY TKS UTAP CGS GLOBAL LST NYT SCBLIF STEC TLUXE UVAPCO CHOW GLOW MAJOR OGC SCCC STPI TMI UWCAPCS CI GOLD MAKRO OISHI SCG SUC TMT VIHAQUA CKP HOTPOT MATCH PACE SEAFCO SWC TNDT WAVEARIP CM HTC MBK PATO SEAOIL SYMC TPC WHAAS CMR HTECH MBKET PB SFP SYNEX TPCORP WINASIA CSC HYDRO MEGA PDI SIAM SYNTEC TRT WINNERAYUD CSP IFS MFC PICO SIRI TASCO TRU YUASA

Source: Thai Institute of Directors (IOD)

Contact

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This report has been prepared by Asia Wealth Securities Company Limited (“AWS”). The information herein has been obtained from sources believed to be reliable and accurate, but AWS makes no representation as to the accuracy and completeness of such information. AWS does not accept any liability for any loss or damage of any kind arising out of the use of such information or opinions in this report. Before making your own independent decision to invest or enter into transaction, investors should study this report carefully and should review information relating. All rights are reserved. This report may not be reproduced, distributed or published by any person in any manner for any purpose without permission of AWS. Investment in securities has risks. Investors are advised to consider carefully before making decisions.

Branch Address Phone Fax

Head Office 540 Floor 7,14,17 , Mercury Tower, Ploenchit Road, Lumphini,

Pathumwan Bangkok 10330

02-680-5000 02-680-5111

Silom 191 Silom Complex Building,21st Floor Room 2,3-1 Silom Rd., Silom,

Bangrak, Bangkok, 10500 Thailand

02-630-3500 02-630-3530-1

Asok 159 Sermmitr Tower, 17th FL. Room No.1703, Sukhumvit 21 Road,

Klong Toey Nua, Wattana, Bangkok 10110

02-261-1314-21 02-261-1328

Pinklao

7/3 Central Plaza Pinklao Office Building Tower B, 16th Flr., Room

No.1605-1606 Baromrajachonnanee Road, Arunamarin,

Bangkoknoi, Bangkok 10700

02-884-7333 02-884-7357,

02-884-7367

Chaengwattana

99/99 Moo 2 Central Plaza Chaengwattana Office Tower, 22nd Flr.,

Room 2204 Chaengwattana Road, Bang Talad, Pakkred, Nonthaburi

11120

02-119-2300 02-835-3014

Chaengwattana 2

9/99 Moo 2 Central Plaza Chaengwattana Office Tower, 22nd Flr.,

Room 2203 Chaengwattana Road, Bang Talad, Pakkred,

Nonthaburi 11120

02-119-2388 02-119-2399

Mega Bangna 39 Moo6 Megabangna, 1st Flr., Room 1632/7 Bangna-Trad Road,

Bangkaew Bangplee, Samutprakarn 10540

02-106-7345 02-105-2070

Rayong 356/18 Sukhumvit Road, Nuen-Phra Sub District, Muang District,

Rayong Province 21000

038-808200 038-807200

Khonkaen 26/9 Srijanmai Road, Tamboonnaimuang, Khon Khaen

40000

043-334-700 043-334-799

Chonburi 44 Vachiraprakarn Road, Bangplasoi, Muang Chonburi, Chonburi

20000

038-053-858 038-784-090

Chaseongsao 233-233/2 Moo2 1st Flr., Sukprayoon Road, Na Meung Sub-District,

Meung District, Chachoengsao 24000

038-981-587 038-981-591