THAILAND EQUITY RESEARCH

Page | 1 | PHILLIP SECURITIES (THAILAND)

Closing Price(Bt) 20.90

Target Price(Bt) 28.00 (+36.65%)

COMPANY DATA

O/S Shares (mn) : 4,814

Market Cap. (Btmn) :

Market Cap. (USDmn) :

52-WK Hi/Lo (Bt) : 28.5/19

3M Average Daily T/O (mn) : 7.32

Par Value (Bt) : 1.00

MAJOR SHAREHOLDERS (%)

1. INDORAMA RESOURCES LTD 63.7

2. BBL 4.8

3. THAI NVDR CO LTD 4.3

PRICE PERFORMANCE (%)

1MTH 3MTH 1YR

ABS -2% -16% 3%

REL TO SET INDEX -1% -6% 29%

PRICE VS SET INDEX

Source: Bloomberg, PSR

KEY FINANCIALS

FYE Dec FY14 FY15E FY16E FY17E

Sales(Btmn) 243,907 230,343 262,767 297,608

Net Profit(Btmn) 1,485 6,392 7,764 8,045

EPS (Bt) 0.31 1.11 1.41 1.48

P/E (X) 67.7 18.8 14.8 14.1

BVPS (Bt) 15.26 15.94 16.92 17.83

P/B (X) 1.4 1.3 1.2 1.2

DPS (Bt) 0.38 0.40 0.56 0.59

Dividend Yield (%) 1.8 1.9 2.7 2.8

ROE (%) 2.22 8.51 9.82 9.62

Debt/Equity (X) 1.63 1.93 2.28 2.49

Source: Company, PSR Est.

**Multiples and yields are based on latest closing price

VALUATION METHOD

P/B'16 (2x)

Ornmongkol Tantitanatorn

Capital Market Investment Analyst # 34100

Tel: 66 2 635 1700 # 491

25 August 2015

100,618

2,793

Buy (Maintain)

25 January 2016

0

10

20

30

40

Jan-14 Jan-15 Jan-16

IVL TB EQUITY SETI (rebased)

Indorama Ventures

4QFY15 results seen pressured by wider inventory losses

THAILAND | SET | PETRO | COMPANY PREVIEW BLOOMBERG IVL TB l REUTERS IVL.BK

4QFY15 profit seen at Bt189mn, down q-q on eroding profitability and shrinking sales volumes We expect IVL to report 4QFY15 profit of Bt189mn, decrease from Bt475mn in 3QFY15. The profit slide would be largely attributable to (i)continue inventory losses of around Bt1,074mn, from Bt1,588mn in 3QFY15 in the aftermath of a fall in parazylene prices in line with a rout in crude oil prices amid oversupply concerns, (ii) eroding profitability with EBITDA/ton expected to drop to US$95/ton from US$96/ton in 3QFY15 as feedstock business in the West, accounting for 20% of its total products came under pressure from softening MEG margins and (iii) shrinking sales volumes. Despite the resumption of operations at MEG plant, we assume 4QFY15 sales volume dropped 3% q-q to 1.75mn tons as a result of the seasonality effects as clients normally reduced their inventory levels by year-end due to long holidays. If 4QFY15 results come in line with our forecasts, full-year profit is expected to come in at Bt6,392mn, revised down from a previous estimate of Bt7,389mn to reflect hefty inventory losses in 4QFY15 but sharply higher than what it achieved in FY14 driven by sales volume growth, ex-items and narrower inventory losses. In our forecast, we assume (i) full-year sales volume rose 12% y-y to 6.99mn tons on the back of new capacity additions through a series of M&As - The successful seven M&A deals in FY15 are expected to drive its profit from normal operations excluding ex-items and inventory effects up 25% y-y to Bt5,853mn in FY15, (ii) exceptional gains of around Bt3,200mn mostly in 2QFY16 from gains on bargain purchases on completed acquisitions and (iii) a decline in inventory losses to Bt2,662mn from Bt3,522mn in FY14. Sales volume growth still holds key to FY16 earnings We believe sales volume growth would continue to be a key earnings driver for IVL in FY16. Our forecast suggests its sales volume will grow in double digits in FY16 though MEG plant has planned a 3-week shutdown to change its aging catalyst, which normally takes place every three years in 1QFY16. In our view, sales volume growth would be driven by (1) the full-year contribution from its recently acquired assets in FY15 including (i) Polyplex with a capacity to produce 252 kta of PET in Mar 2015, (ii) Performance Fibers with a capacity to produce 41 kta of fabric in Apr 2015, (iii) Bangkok Polyester with a capacity to produce 105 kta of PET in May 2015, (iv) Cepsa Canada with a capacity to produce 600 kta of PTA in Jun 2015, (v) MicroPet with a capacity to produce 216 kta of PET in Dec 2015, (2) additional capacity through acquisitions of Cepsa Spain with a capacity to produce 720 kta of IPA, PET and PTA and BP Amoco Chem with a capacity to produce 1,020 kta of PTA from 2QFY16 onwards and (3) capacity debottlenecking at Rotterdam PTA plant to 710 kta from 380 kta. We estimate IVL’s sales volume will rise 25% y-y to 8.73mn tons in FY16. Even the higher volume from the M&A completion, the previous volume forecast of 8.03mn tons, we trim our FY16 profit outlook for IVL by 3% to Bt7,764mn to reflect more negative headwinds. As crude oil price weakness, the higher spread of petroleum and petrochemical is subsidy the soften MEG spread for integrated player. As softening MEG margins, we cut our FY16 EBITDA/ton assumption for IVL to US$95/ton from US$96/ton.

FY16 target price cut to Bt28/share but ‘BUY’ rating maintained Following the above earnings downgrade, we slash our FY16 target price for IVL to Bt28share from Bt29/share. Despite earnings and price target cuts, we maintain a ‘BUY’ call on IVL shares in view of sales volume growth which holds key to FY16 earnings and attractive valuations. Currently IVL trades at a P/B of 1.2x, a big discount to its historical mean of 2.0x.

THAILAND EQUITY RESEARCH

PHILLIP SECURITIESS (THAILAND) | 2 | P a g e

Corporate Governance -2015

ADVANC BAFS BCP BIGC BTS CK CPN DRT DTAC DTC

EASTW EGCO GRAMMY HANA HMPRO INTUCH IRPC IVL KBANK KCE

KKP KTB LHBANK LPN MCOT MINT MONO NKI PHOL PPS

PS PSL PTT PTTEP PTTGC QTC RATCH ROBINS SAMART SAMTEL

SAT SC SCB SCC SE-ED SIM SNC SPALI THCOM TISCO

TKT TMB TOP VGI WACOAL

AAV ACAP AGE AHC AKP AMATA ANAN AOT APCS ARIP

ASIMAR ASK ASP BANPU BAY BBL BDMS BECL BKI BLA

BMCL BOL BROOK BWG CENTEL CFRESH CHO CIMBT CM CNT

COL CPF CPI CSL DCC DELTA DEMCO ECF EE ERW

GBX GC GFPT GLOBAL GUNKUL HEMRAJ HOTPOT HYDRO ICC ICHI

INET IRC KSL KTC LANNA LH LOXLEY LRH MACO MBK

MC MEGA MFEC NBC NCH NINE NSI NTV OCC OGC

OISHI OTO PAP PDI PE PG PJW PM PPP PR

PRANDA PREB PT PTG Q-CON QH RS S & J SABINA SAMCO

SCG SEAFCO SFP SIAM SINGER SIS SITHAI SMK SMPC SMT

SNP SPI SSF SSI SSSC SST STA STEC SVI SWC

SYMC SYNTEC TASCO TBSP TCAP TF TGCI THAI THANA THANI

THIP THRE THREL TICON TIP TIPCO TK TKS TMI TMILL

TMT TNDT TNITY TNL TOG TPC TPCORP TRC TRU TRUE

TSC TSTE TSTH TTA TTCL TTW TU TVD TVO TWFP

TWS UAC UT UV VNT WAVE WINNER YUASA ZMICO

2S AEC AEONTS AF AH AIRA AIT AJ AKR AMANAH

AMARIN AP APCO AQUA AS ASIA AUCT AYUD BA BEAUTY

BEC BFIT BH BIG BJC BJCHI BKD BTNC CBG CGD

CHG CHOW CI CITY CKP CNS CPALL CPL CSC CSP

CSS CTW DNA EARTH EASON ECL EFORL ESSO FE FIRE

FOCUS FORTH FPI FSMART FSS FVC GCAP GENCO GL GLAND

GLOW GOLD GYT HTC HTECH IEC IFEC IFS IHL IRCP

ITD JSP JTS JUBILE KASET KBS KCAR KGI KKC KTIS

KWC KYE L&E LALIN LHK LIT LIVE LST M MAJOR

MAKRO MATCH MATI MBKET M-CHAI MFC MILL MJD MK MODERN

MOONG MPG MSC MTI MTLS NC NOK NUSA NWR NYT

OCEAN PACE PATO PB PCA PCSGH PDG PF PICO PL

PLANB PLAT PPM PRG PRIN PSTC PTL PYLON QLT RCI

RCL RICHY RML RPC S SALEE SAPPE SAWAD SCCC SCN

SCP SEAOIL SIRI SKR SMG SOLAR SORKON SPA SPC SPCG

SPPT SPVI SRICHA SSC STANLY STPI SUC SUSCO SUTHA SYNEX

TAE TAKUNI TCC TCCC TCJ TEAM TFD TFI TIC TIW

TLUXE TMC TMD TOPP TPCH TPIPL TRT TSE TSR UMI

UP UPF UPOIC UREKA UWC VIBHA VIH VPO WHA WIN

XO

Score Range

< 50%

50-59%

60-69%

70-79%

80-89%

90-100%

The disclosure of the survey result of the Thai Institute of Directors Association (IOD)

regarding corporate governance is made pursuant to the Office of the Securities and

Exchange Commission. The survey of the IOD is based on the information of a company

l isted on the Stock Exchange of Thailand and the Market for Alternative disclosure to the

public and able to be accessed by a general public investor. The results, 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 data. Phil l ip

Securities (Thailand) of securities company does not confirm nor certify the accuracy of

such survey result.

No logo given

Number of Logo

Results Presentation

THAILAND EQUITY RESEARCH

PHILLIP SECURITIESS (THAILAND) | 3 | P a g e

Industry Group Name Sector Name Sector Index

Agro & Food Industry[AGRO] Agribusiness AGRI

Food & Beverage FOOD

Consumer Products[CONSUMP] Fashion FASHION

Home & Office Products HOME

Personal Products & Pharmaceuticals PERSON

Financials [FINCIAL] Banking BANK

Finance & Securities FIN

Insurance INSUR

Industrials [INDUS] Automotive AUTO

Industrial Materials & Machinery IMM

Packaging PKG

Paper & Printing Materials PAPER

Petrochemicals & Chemicals PETRO

Steel STEEL

Property & Construction[PROPCON] Construction Materials CONMAT

Construction Services CONS

Property Development PROP

Property Fund & REITs PF&REIT

Resources [RESOURC] Energy & Uti l ities ENERG

Mining MINE

Services [SERVICE] Commerce COMM

Media & Publishing MEDIA

Health Care Services HELTH

Tourism & Leisure TOURISM

Professional Services PROF

Transportation & Logistics TRANS

Technology [TECH] Electronic Components ETRON

Information & Communication Technology ICT

PSR Rating SystemCapital Gain Recommendation

> 15% BUY

> 5% - 15% ACCUMULATE / TRADING BUY

> 0% - 5% NEUTRAL

0 <= SELL

Remarks

We do not base our recommendations entirely on the above quantitative return bands. We consider qual itative factors l ike (but

not l imited to) a stock's risk reward profi le, market sentiment, recent rate of share price appreciation, presence or absence of

stock price catalysts, and speculative undertones surrounding the stock, before making our final recommendation

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