Company Coverage
Thai Oil (TOP TB): Seasonal Demand Expected To Support GRM Recovery
BUY (Maintained)
Current price:
Target price:
Upside:
Bt59.00
Bt100.00
+69.49%
Analyst
Analyst
Highlights
- We expect GRM to recover, supported by stronger middle distillate demand during the winter season and extensive refinery maintenance shutdowns across the US and Asia in 1H27.
- TOP's management maintained its target for full COD of the CFP project by 3Q28, with no cost overruns or further impairment expected. A conclusion on the ERU project is expected by end-Jan 27.
- 3Q26 net profit was in line with our estimate and 11% above consensus.
- TOP maintains a strong financial position. We estimate a 2027 dividend of Bt4.00/share. Maintain BUY. Target price: Bt100.00.
Analysis
- The tone from the meeting with Thai Oil (TOP) was positive.
- GRM outlook remains positive, supported by seasonal demand and refinery maintenance shutdowns. We maintain our positive outlook on the gross refinery margin (GRM), despite near-term pressure in 4Q26 from higher crude premiums and freight rates, as well as the impact of government measures to seek reductions in ex-refinery diesel prices. We view these as temporary headwinds and expect GRM to recover, supported by stronger seasonal demand during the winter season, particularly for middle distillates. Meanwhile, petroleum product supply remains tight, as reflected by global gasoil and gasoline inventories remaining below their five-year averages. This partly reflects the impact of the ongoing war, particularly attacks on Russian refineries, which have affected approximately 1.40m-1.70m barrels per day (MBD) of refining capacity, equivalent to 27-33% of Russia's total refining capacity. Russian petroleum product exports also remain below pre-war levels, and TOP expects supply conditions to remain below pre-war levels throughout 2027.
- Furthermore, we expect GRM to remain strong through 1H27, supported by an upcoming wave of refinery maintenance shutdowns, as several refineries have postponed their maintenance schedules to 1Q27. This is particularly significant in the US, which accounts for approximately 8% of global refined product supply, followed by scheduled refinery maintenance in Asia in 2Q27. Although market GRM is likely to moderate from current elevated levels, we expect it to remain above pre-war levels. This should support TOP's earnings resilience and improve earnings visibility.
Highlights
- We expect GRM to recover, supported by stronger middle distillate demand during the winter season and extensive refinery maintenance shutdowns across the US and Asia in 1H27.
- TOP's management maintained its target for full COD of the CFP project by 3Q28, with no cost overruns or further impairment expected. A conclusion on the ERU project is expected by end-Jan 27.
- 3Q26 net profit was in line with our estimate and 11% above consensus.
- TOP maintains a strong financial position. We estimate a 2027 dividend of Bt4.00/share. Maintain BUY. Target price: Bt100.00.
Analysis
- The tone from the meeting with Thai Oil (TOP) was positive.
- GRM outlook remains positive, supported by seasonal demand and refinery maintenance shutdowns. We maintain our positive outlook on the gross refinery margin (GRM), despite near-term pressure in 4Q26 from higher crude premiums and freight rates, as well as the impact of government measures to seek reductions in ex-refinery diesel prices. We view these as temporary headwinds and expect GRM to recover, supported by stronger seasonal demand during the winter season, particularly for middle distillates. Meanwhile, petroleum product supply remains tight, as reflected by global gasoil and gasoline inventories remaining below their five-year averages. This partly reflects the impact of the ongoing war, particularly attacks on Russian refineries, which have affected approximately 1.40m-1.70m barrels per day (MBD) of refining capacity, equivalent to 27-33% of Russia's total refining capacity. Russian petroleum product exports also remain below pre-war levels, and TOP expects supply conditions to remain below pre-war levels throughout 2027.
- Furthermore, we expect GRM to remain strong through 1H27, supported by an upcoming wave of refinery maintenance shutdowns, as several refineries have postponed their maintenance schedules to 1Q27. This is particularly significant in the US, which accounts for approximately 8% of global refined product supply, followed by scheduled refinery maintenance in Asia in 2Q27. Although market GRM is likely to moderate from current elevated levels, we expect it to remain above pre-war levels. This should support TOP's earnings resilience and improve earnings visibility.
BUY (Maintained)
Current price:
Target price:
Upside:
Bt59.00
Bt100.00
+69.49%
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.
