Company Coverage
PTT Global Chemical (PTTGC TB): Olefins Outlook: Tight Supply Set To Drive Stronger Spreads
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
Bt37.50
Bt48.00
+30.60%
Bt46.00
Analyst
Analyst
Highlights
- Strong balance sheet provides sufficient financial flexibility to navigate continued market volatility.
- Polyolefins should continue to benefit from tight supply, while the SCGC JV is expected to reach a conclusion by Sep 26.
- Maintain BUY with a target price of Bt48.00 (previously Bt46.00).
Analysis
- The tone during our meeting with PTT Global Chemical (PTTGC) was positive.
- Portfolio transformation toward specialty businesses. PTTGC is accelerating its portfolio transformation by exiting or restructuring non competitive assets, including the transfer of its stake in Vencorex and plans to shut down GC Polyols (GCP), which are expected to improve earnings by around Bt5.00b. At the same time, PTTGC is implementing enhancement initiatives, focusing on cost reduction and alternative feedstock sourcing, targeting total benefits of more than Bt4.00b in 2026. The company has already achieved over 50% of the target in 1H26. PTTGC is also positioning its Map Ta Phut complex as a specialty-led platform through an MOU with SCG Chemical (SCGC) to study a JV in the polyolefins business, with a conclusion expected by Sep 26. Meanwhile, the company aims to increase the share of specialty products to 30% of its product portfolio in the future.
- Strong financial position. PTTGC has significantly strengthened its balance sheet through deleveraging, with interest-bearing debt falling to Bt149b at
end-2Q26, the lowest level since 2021. Total debt has been reduced by Bt116b, supported by extended trade credit and asset monetisation. As a result, net IBD/equity improved to 0.38x, while net IBD/adjusted EBITDA stood at 2.31x in 2Q26. PTTGC also plans to issue new baht-denominated bonds, including 7-year bonds at 2.65-2.80% and 10-year bonds at 3.00 3.15%, to extend its debt maturity profile and maintain an investment-grade credit rating.
- Tight Middle East supply to support Dubai crude. For 2026, PTTGC expects Dubai crude prices to range between US$75-90/bbl, supported mainly by geopolitical tensions in the Middle East, particularly the risk of disruptions to shipments through the Strait of Hormuz and Bab el-Mandeb. However, rising inflation could limit the upside for crude prices. Crack spreads remain under pressure from higher crude premiums, although global diesel inventories remain below the five-year average, supporting PTTGC's expectations for gasoil 10 ppm spread at US$46-50/bbl and gasoline spread at US$18-22/bbl.
- Tight Middle East supply to support olefins in 2H26. The aromatics chain is expected to recover strongly, with PTTGC expecting paraxylene (PX) spread at
US$275/tonne and benzene (BZ) spread at US$145/tonne in 2H26. The key support comes from tighter supply, with China's benzene inventories falling to a five-year low, together with seasonal demand for BZ and PX in gasoline blending. Meanwhile, the olefins and polymers chains remain pressured by weaker demand amid slower economic growth, but tighter Middle East supply should provide support. PTTGC expects high-density polyethylene (HDPE) prices to range between US$1,120-1,150/tonne, with a HDPE spread of US$370/tonne and polypyrene (PP) spread of
US$390/tonne in 2H26.
- 2Q26 net profit beat expectations. PTTGC reported 2Q26 net profit of Bt12.21b, up both qoq and yoy, beating our estimate and consensus by 36% and 48%, respectively. The beat was mainly driven by stronger-than-expected EBITDA from the polyolefins and performance chemicals businesses. Excluding special items, including GCP impairment, forex gain, stock gain and hedging loss, core profit was Bt14.15b, also increasing strongly both qoq and yoy. The strong core earnings were supported by sufficient gas and naphtha feedstock, allowing PTTGC to maintain production despite the Hormuz disruption. The company also benefitted directly from stronger BTX and polyolefins spreads, which improved significantly both qoq and yoy, together with higher total production following the restart of the OLE4 plant.
Highlights
- Strong balance sheet provides sufficient financial flexibility to navigate continued market volatility.
- Polyolefins should continue to benefit from tight supply, while the SCGC JV is expected to reach a conclusion by Sep 26.
- Maintain BUY with a target price of Bt48.00 (previously Bt46.00).
Analysis
- The tone during our meeting with PTT Global Chemical (PTTGC) was positive.
- Portfolio transformation toward specialty businesses. PTTGC is accelerating its portfolio transformation by exiting or restructuring non competitive assets, including the transfer of its stake in Vencorex and plans to shut down GC Polyols (GCP), which are expected to improve earnings by around Bt5.00b. At the same time, PTTGC is implementing enhancement initiatives, focusing on cost reduction and alternative feedstock sourcing, targeting total benefits of more than Bt4.00b in 2026. The company has already achieved over 50% of the target in 1H26. PTTGC is also positioning its Map Ta Phut complex as a specialty-led platform through an MOU with SCG Chemical (SCGC) to study a JV in the polyolefins business, with a conclusion expected by Sep 26. Meanwhile, the company aims to increase the share of specialty products to 30% of its product portfolio in the future.
- Strong financial position. PTTGC has significantly strengthened its balance sheet through deleveraging, with interest-bearing debt falling to Bt149b at
end-2Q26, the lowest level since 2021. Total debt has been reduced by Bt116b, supported by extended trade credit and asset monetisation. As a result, net IBD/equity improved to 0.38x, while net IBD/adjusted EBITDA stood at 2.31x in 2Q26. PTTGC also plans to issue new baht-denominated bonds, including 7-year bonds at 2.65-2.80% and 10-year bonds at 3.00 3.15%, to extend its debt maturity profile and maintain an investment-grade credit rating.
- Tight Middle East supply to support Dubai crude. For 2026, PTTGC expects Dubai crude prices to range between US$75-90/bbl, supported mainly by geopolitical tensions in the Middle East, particularly the risk of disruptions to shipments through the Strait of Hormuz and Bab el-Mandeb. However, rising inflation could limit the upside for crude prices. Crack spreads remain under pressure from higher crude premiums, although global diesel inventories remain below the five-year average, supporting PTTGC's expectations for gasoil 10 ppm spread at US$46-50/bbl and gasoline spread at US$18-22/bbl.
- Tight Middle East supply to support olefins in 2H26. The aromatics chain is expected to recover strongly, with PTTGC expecting paraxylene (PX) spread at
US$275/tonne and benzene (BZ) spread at US$145/tonne in 2H26. The key support comes from tighter supply, with China's benzene inventories falling to a five-year low, together with seasonal demand for BZ and PX in gasoline blending. Meanwhile, the olefins and polymers chains remain pressured by weaker demand amid slower economic growth, but tighter Middle East supply should provide support. PTTGC expects high-density polyethylene (HDPE) prices to range between US$1,120-1,150/tonne, with a HDPE spread of US$370/tonne and polypyrene (PP) spread of
US$390/tonne in 2H26.
- 2Q26 net profit beat expectations. PTTGC reported 2Q26 net profit of Bt12.21b, up both qoq and yoy, beating our estimate and consensus by 36% and 48%, respectively. The beat was mainly driven by stronger-than-expected EBITDA from the polyolefins and performance chemicals businesses. Excluding special items, including GCP impairment, forex gain, stock gain and hedging loss, core profit was Bt14.15b, also increasing strongly both qoq and yoy. The strong core earnings were supported by sufficient gas and naphtha feedstock, allowing PTTGC to maintain production despite the Hormuz disruption. The company also benefitted directly from stronger BTX and polyolefins spreads, which improved significantly both qoq and yoy, together with higher total production following the restart of the OLE4 plant.
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
Bt37.50
Bt48.00
+30.60%
Bt46.00
Analyst
Analyst
IMPORTANT NOTICE - DISCLOSURES AND DISCLAIMERS
This report is provided subject to, and must be read together with, the full Disclosures / Disclaimers available at this link, which are incorporated by reference into this report. In particular, this report is intended for general circulation and informational purposes only and does not constitute personal investment advice or a recommendation to buy or sell any investment product or security. You should independently evaluate the information and, where necessary, seek advice from a qualified financial adviser regarding the suitability of any investment. Analyst certifications required under applicable regulations, including SEC Regulation AC (where relevant), are included in this report. By accessing, receiving or using this report, you acknowledge that you have read, understood and agreed to be bound by the Disclosures / Disclaimers, as may be amended, supplemented or updated from time to time.
