Company Coverage
Indorama Ventures (IVL TB) 2Q26: A Strong Quarter, But Momentum Likely To Moderate
BUY (Maintained)
Current price:
Target price:
Upside:
Bt22.00
Bt27.00
22.7%
Analyst
Highlights
- IVL reported a net profit of Bt6.0b for 2Q26, supported by higher PET spreads while its balance sheet continued to improve as expected.
- 3Q26 earnings should normalise from a high base, but remain above last year's level.
- Maintain BUY with roll-over target to 2027F at Bt27.00.
Analysis
- 2Q26 earnings recovered strongly. Indorama Ventures (IVL) reported 2Q26 net profit of Bt6.0b (vs a Bt521m loss in 2Q25 and Bt2.8b loss in 1Q26),
11% below our expectation due to a Bt1.2b severance expense and Bt796m impairment loss. Excluding these one-offs, core profit reached Bt9.2b, in line with our expectations, driven by stronger integrated PET spreads and broadbased margin improvement. 1H26 earnings accounted for 41% of our fullyear forecast. Overall operating numbers were in line with expectations (see report on 31 July).
- Margin expansion offset weaker volumes. Production volume declined 10% yoy and 3% qoq to 3.02m tonnes as management prioritised margins over utilisation. Reported EBITDA surged to Bt21.7b (+133% yoy, +169% qoq), while EBITDA/tonne improved to US$220 (vs US$82 in 1Q26), reflecting stronger spreads across all major businesses.
- Balance sheet continues to strengthen. Strong operating cash flow and disciplined working capital management reduced net debt by Bt9.6b to
Bt226b at end-2Q26. As a result, net D/E improved to 1.56x from 1.83x at end-25, while interest expense declined 12% yoy and 5% qoq, reinforcing management's deleveraging strategy
- 3Q26 earnings should remain resilient. While PET spreads have eased from the 2Q26 peak, weekly industry data indicate that PET spreads have
stabilised and PTA spreads remain near cycle highs, limiting downside to integrated PET margins. Based on PTTGC's latest weekly industry data, PET spreads have stabilised at around US$80/tonne in early-August, while PTA spreads remain firm at US$90-100/tonne, suggesting integrated PET spreads are normalising at US$175/tonne. We estimate 3Q26 EBITDA of around US$420m, implying core profit of Bt2.5b-3.0b. This is better than the Bt818m loss reported in 3Q25. Note that we maintain our EBITDA target of US$1,550m in 2026.
- Old World restructuring not an immediate concern. During the analyst meeting, management indicated that IVL may incur additional restructuring expenses from rationalising underperforming assets, particularly Old World EO/MEG assets in the US (acquired in 2012). However, management clarified that no restructuring charge is expected in 2026. The company will revisit the optimisation of the assets next year and any action will depend on market conditions and management's assessment. In our view, any potential charge should be manageable. We calculate that these assets have generated solid returns over the past 10 years and are largely depreciated.
Highlights
- IVL reported a net profit of Bt6.0b for 2Q26, supported by higher PET spreads while its balance sheet continued to improve as expected.
- 3Q26 earnings should normalise from a high base, but remain above last year's level.
- Maintain BUY with roll-over target to 2027F at Bt27.00.
Analysis
- 2Q26 earnings recovered strongly. Indorama Ventures (IVL) reported 2Q26 net profit of Bt6.0b (vs a Bt521m loss in 2Q25 and Bt2.8b loss in 1Q26),
11% below our expectation due to a Bt1.2b severance expense and Bt796m impairment loss. Excluding these one-offs, core profit reached Bt9.2b, in line with our expectations, driven by stronger integrated PET spreads and broadbased margin improvement. 1H26 earnings accounted for 41% of our fullyear forecast. Overall operating numbers were in line with expectations (see report on 31 July).
- Margin expansion offset weaker volumes. Production volume declined 10% yoy and 3% qoq to 3.02m tonnes as management prioritised margins over utilisation. Reported EBITDA surged to Bt21.7b (+133% yoy, +169% qoq), while EBITDA/tonne improved to US$220 (vs US$82 in 1Q26), reflecting stronger spreads across all major businesses.
- Balance sheet continues to strengthen. Strong operating cash flow and disciplined working capital management reduced net debt by Bt9.6b to
Bt226b at end-2Q26. As a result, net D/E improved to 1.56x from 1.83x at end-25, while interest expense declined 12% yoy and 5% qoq, reinforcing management's deleveraging strategy
- 3Q26 earnings should remain resilient. While PET spreads have eased from the 2Q26 peak, weekly industry data indicate that PET spreads have
stabilised and PTA spreads remain near cycle highs, limiting downside to integrated PET margins. Based on PTTGC's latest weekly industry data, PET spreads have stabilised at around US$80/tonne in early-August, while PTA spreads remain firm at US$90-100/tonne, suggesting integrated PET spreads are normalising at US$175/tonne. We estimate 3Q26 EBITDA of around US$420m, implying core profit of Bt2.5b-3.0b. This is better than the Bt818m loss reported in 3Q25. Note that we maintain our EBITDA target of US$1,550m in 2026.
- Old World restructuring not an immediate concern. During the analyst meeting, management indicated that IVL may incur additional restructuring expenses from rationalising underperforming assets, particularly Old World EO/MEG assets in the US (acquired in 2012). However, management clarified that no restructuring charge is expected in 2026. The company will revisit the optimisation of the assets next year and any action will depend on market conditions and management's assessment. In our view, any potential charge should be manageable. We calculate that these assets have generated solid returns over the past 10 years and are largely depreciated.
BUY (Maintained)
Current price:
Target price:
Upside:
Bt22.00
Bt27.00
22.7%
Analyst
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