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Pi Securities PCL, Thailand

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Equity Bottom-Up

Global Green Chemicals / Equity Bottom-Up

<ul>
<li>We maintain the SELL rating with a TP of Bt12.80.GGC reported a weak 3Q22 net profit ofBt70m,declining both YoY and QoQ due to a huge stock loss from biodiesel(ME) business.</li>
<li>Weak ME contribution and stock loss hit 3Q22 profit The 3Q22 net profit plunged to Bt70m ( -72% YoY, -84% QoQ), dragged by a huge stock loss of Bt441m </li>
<li>Stripping off the stock loss, adjusted EBITDA stood at Bt741m (+127%YoY,-7%QoQ). The YoY surge was underpinned by rising contribution from the Fatty alcohols – FA business (40% of 3Q22 sales),</li>
</ul>


We maintain the SELL rating with a TP of Bt12.80.GGC reported a weak 3Q22 net profit ofBt70m,declining both YoY and QoQ due to a huge stock loss from biodiesel(ME) business.
Weak ME contribution and stock loss hit 3Q22 profit The 3Q22 net profit plunged to Bt70m ( -72% YoY, -84% QoQ), dragged by a huge stock loss of Bt441m 
Stripping off the stock loss, adjusted EBITDA stood at Bt741m (+127%YoY,-7%QoQ). The YoY surge was underpinned by rising contribution from the Fatty alcohols – FA business (40% of 3Q22 sales),


GGC : Weak 2023 Outlook from Softening FA Margin

<ul>
<li>We reiterate our SELL rating with a TP of Bt12.8 derived from 1.2BV’23E.Given cloudy 2H22 and 2023E earnings trend from weaker CPO and CPKO prices off seasonal effects and oversupply</li>
<li>Neutral tone from the analyst meeting.We foresee a challenging tide in 2H22 growth momentum due to seasonal rout in 3Q22 amid the Thai government to keep the B5 blending ratio</li>
<li>Nakhonsawan Bio-complex on plan Nakhonsawan Bio-complex phase I is expected to COD in 1Q23, so we do see potential upside in the long term. Note that the Nakonsawan Bio-complex </li>
</ul>


We reiterate our SELL rating with a TP of Bt12.8 derived from 1.2BV’23E.Given cloudy 2H22 and 2023E earnings trend from weaker CPO and CPKO prices off seasonal effects and oversupply
Neutral tone from the analyst meeting.We foresee a challenging tide in 2H22 growth momentum due to seasonal rout in 3Q22 amid the Thai government to keep the B5 blending ratio
Nakhonsawan Bio-complex on plan Nakhonsawan Bio-complex phase I is expected to COD in 1Q23, so we do see potential upside in the long term. Note that the Nakonsawan Bio-complex 


<ul>
<li>We downgrade to SELL from HOLD and roll over TP to Bt12.80(-2% from previous TP), derived from 1.2xPBV’23E.Given cloudy 2H22 and 2023E earnings momentum from weaker CPO and CPKO prices</li>
<li>Fatty alcohol was a key driver to 2Q22 profit GGC’s 2Q22 core profit was at Bt264m, jumped489%YoY but weakened 3%QoQ,which was slightly stronger-than-expected. Behind the strong YoY growth was underpinned </li>
<li>Incoming rain with cloudy outlook in 2H22 1H22 accounted 92% of the 2022E projection, which we will revise after the analyst meeting on 16 August, but expect no impact </li>
</ul>


We downgrade to SELL from HOLD and roll over TP to Bt12.80(-2% from previous TP), derived from 1.2xPBV’23E.Given cloudy 2H22 and 2023E earnings momentum from weaker CPO and CPKO prices
Fatty alcohol was a key driver to 2Q22 profit GGC’s 2Q22 core profit was at Bt264m, jumped489%YoY but weakened 3%QoQ,which was slightly stronger-than-expected. Behind the strong YoY growth was underpinned 
Incoming rain with cloudy outlook in 2H22 1H22 accounted 92% of the 2022E projection, which we will revise after the analyst meeting on 16 August, but expect no impact 


GGC : 2Q22 Core Profit Grew YoY and Drop QoQ

<ul>
<li>Last week analyst meeting came out in a negative tone.Maintain HOLD rating with a new TP of Bt13.00(down 9% from previous TP) based on 1.27xPBV’22E which is close to ASIA </li>
<li>We foresee earnings momentum to slowdown QoQ in 2Q22,pressure by change to B5 biodiesel policy,along with seasonality effect will hurt biodiesel demand despite lockdown easing, but should be mildly cushion</li>
<li>Meanwhile, FA demand in 2Q22 should remain stable backed by growing consumption of personal care products and rising prices for substitute products</li>
</ul>


Last week analyst meeting came out in a negative tone.Maintain HOLD rating with a new TP of Bt13.00(down 9% from previous TP) based on 1.27xPBV’22E which is close to ASIA 
We foresee earnings momentum to slowdown QoQ in 2Q22,pressure by change to B5 biodiesel policy,along with seasonality effect will hurt biodiesel demand despite lockdown easing, but should be mildly cushion
Meanwhile, FA demand in 2Q22 should remain stable backed by growing consumption of personal care products and rising prices for substitute products


<ul>
<li>Maintain HOLD rating given limited upside from current market price, with a TP of Bt14.20 based on 1.4xPBV’22E, which is ASIA ex-Japan Material sector. Our rating reflects better biodiesel </li>
<li>Its 4Q21 core profit was at Bt347m (-39%YoY,+42%QoQ), supported by strong revenue growth and wider margin.</li>
<li>In our view, 22-23E core profit will grow at 2%/5% due to anticipation of prices decline, to offset by stable ME and FA demand.</li>
</ul>


Maintain HOLD rating given limited upside from current market price, with a TP of Bt14.20 based on 1.4xPBV’22E, which is ASIA ex-Japan Material sector. Our rating reflects better biodiesel 
Its 4Q21 core profit was at Bt347m (-39%YoY,+42%QoQ), supported by strong revenue growth and wider margin.
In our view, 22-23E core profit will grow at 2%/5% due to anticipation of prices decline, to offset by stable ME and FA demand.


GGC: Upside Potential Is Limited in the Medium Term

Thailand

Global Green Chemicals Public Company Limited manufactures chemicals. The Company produces and sells methyl esters, fatty alcohols, refined glycerine, and other oleochemical products. Global Green Chemicals serves customers worldwide.

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Global Green Chemicals (GGC TB)

GGC : Weak 2023 Outlook from Softening FA Margin

We maintain the SELL rating with a TP of Bt12.80. GGC reported a weak 3Q22 net profit of Bt70m, declining both YoY and QoQ due to a huge stock loss...

Pi Securities PCL, Thailand

GGC : Challenging Outlook in 2H22

We reiterate our SELL rating with a TP of Bt12.8 derived from 1.2BV’23E. Given cloudy 2H22 and 2023E earnings trend from weaker CPO and CPKO prices...

Pi Securities PCL, Thailand

GGC : 2Q22 Core Profit Grew YoY and Drop QoQ

We downgrade to SELL from HOLD and roll over TP to Bt12.80 (-2% from previous TP), derived from 1.2xPBV’23E. Given cloudy 2H22 and 2023E earnings...

Pi Securities PCL, Thailand

GGC: Muted 2H22 Growth Expectations

Last week analyst meeting came out in a negative tone. Maintain HOLD rating with a new TP of Bt13.00 (down 9% from previous TP) based on...

Pi Securities PCL, Thailand

GGC: Upside Potential Is Limited in the Medium Term

Maintain HOLD rating given limited upside from current market price, with a TP of Bt14.20 based on 1.4xPBV’22E, which is ASIA ex-Japan Material...

Pi Securities PCL, Thailand

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