TPIPL announced a 1Q08 net profit of Bt955mn, up 24.3% YoY and 224.6% QoQ. Stripping out FX gains from its loans of Bt399m, normalized profit was Bt556m, up 11.6% YoY and 161.6% QoQ. The improved results were attributable to the price adjustment for its chemical and cement products, and higher cement sales volume from strong seasonality for construction in the first quarter. Its 1Q08 earnings accounted for 30% of 2008 earnings forecasts.
1Q08 sales were Bt6.9bn, up 19.7% YoY and 10.9% QoQ, powered by strong seasonality for cement sales and newly-adjusted cement and chemical selling price. Domestic cement sales volume picked up QoQ, thanks to strong seasonal demand for construction activities in the first quarter. Although local sales volume was still down YoY, it was entirely offset by cement selling prices rising around Bt200 per ton, up around 10.0% YoY and QoQ. In addition, LDPE selling price for its chemical unit surged to a new record of US$1,726 per ton in 1Q08, up 31.0% YoY and 7.0% QoQ.
Gross margin was 25.0%, flat YoY but up 3.8ppts QoQ. Despite production cost pressure, its newly-adjusted cement and chemical selling prices pushed gross margin up QoQ.
Though the company’s revenue is likely to benefit from the increases in chemical and cement selling prices this year, earnings will decline around 25.0% YoY to Bt1.8bn due to rising production costs, higher SG&A expenses and interest expenses from the delayed refinancing process. Meanwhile, overhang from the timing of its huge fine payment of Bt6.9bn and risks of delay in refinancing from the end of 2008 will cap the share price.
Source: KGI Securities, Thailand