WEEKLY UPDATE

Thailand

Commodities Update Key messages

Upward revision in US crude production forecast

Dubai crude price was flat WoW at US$60.5/bbl, as higher US commercial crude stocks and US crude production continued to pressure. Thus, crude price may drop below US$60/bbl in the shortterm. For the refinery market, Singapore GRM dropped 3% WoW to US$7.6/bbl due to lower gas oil spread. With higher crude premium cost for light crude feedstocks and lower Singapore GRM in 1QTD18, we recommend taking profits on Thai Oil (TOP.BK/TOP TB)* and Star Petroleum Refining (SPRC.BK/SPRC TB)*. Meanwhile, our top picks are Banpu (BANPU.BK/BANPU TB)* and IRPC (IRPC.BK/IRPC TB)*.

Event Weekly commodities update. Impact Crude market: EIA adjusted up US crude output forecast to 10.7MBD this year Dubai crude price was flat WoW at US$60.5/bbl last Friday as crude fundamental data from the US continued to pressure. US commercial crude inventories increased for the second consecutive week to 426mn bbls, up 2.4mn bbls WoW. US crude production also jumped by 90KBD WoW to 10.37MBD, another new all-time record high although US oil rig count slightly dropped by 4 WoW to 796. In addition, the Energy Information Administration (EIA) published its March report last week that revised up the US crude production forecasts to 10.7MBD in 2018 and 11.3MBD in 2019, up 0.1MBD each year from the previous monthly report. Thus, crude price may drop below US$60/bbl in the short-term as the refinery market is entering the maintenance season in the second quarter. Refinery market: Softer gas oil spread WoW Singapore GRM dropped 3% WoW to US$7.6/bbl due to lower gas oil spread. Gas oil spread inched down 2% WoW to US$14.4/bbl as strong gas oil demand from the winter season is

ending,

while

gasoline spread was

maintained WoW

at

US$14.2/bbl. High crude premium cost for light crude feedstocks has still pressured the refinery margin. We could see Murban crude premium cost 1QTD18 was at US$3.5/bbl, up 21% from 4Q17’s average of US$2.9/bbl. Also, Singapore GRM 1QTD18 was at US$6.9/bbl, down 4% from 4Q17’s average; this benchmark does not include the impact of crude premium cost. In the short-term, we recommend

Kaweewit Thawilwithayanon 66.2658.8888 Ext.8847 [email protected]

taking profits

on

Thai

Oil

(TOP.BK/TOP

TB)*

and

Star Petroleum Refining

(SPRC.BK/SPRC TB)*. Coal market: Decreased US$2.1/ton WoW The Newcastle Export Index (NEX) declined 2% WoW to US$103/ton but is still at a very high level compared to a normal level of US$80/ton. The high coal price has been supported by strong demand from Northeast Asia, especially China and tighter supply from producing countries. Last Friday, Indonesia's Ministry of Energy and Mineral Resources set the domestic coal price of US$70/ton for calorific value of 6,322 kcal/kg to keep Indonesian electricity tariffs unchanged this year, while Newcastle 6,300 kcal/kg coal is still trading close to US$100/ton. The rule will be applied retroactively to January 1, 2018, and will be fixed until December 2019. Note, NEX coal price 1QTD18 was at US$106/ton, up 7% from 4Q17’s average.

Figure 1: US oil rig count inched down by 4 WoW to 796 but US crude output jumped by 90KBD WoW to 10.37MBD Number of US oil rigs, unit (LHS); US crude output, MBD (RHS) 900

11.0

800

10.5

700

10.0

Crude production, MBD 36

New high of 34.1MBD in Nov 2016

34

9.5

600

9.0

500

32

Average of 31.5MBD

8.5

400

8.0 7.0 Apr-16

Jul-16

Oct-16

USoil rig count

March 13, 2018

Jan-17

Apr-17

30

7.5

Bottonof 316 rigs in late May 2016

Jul-17

Oct-17

UScrude output

Jan-18

28 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18

300

200 Jan-16

Figure 2: OPEC crude production inched down by 80KBD MoM to 32.3MBD in February

*The Company may be issuer of Derivative Warrants on these securities. http://research.kgi.com; Bloomberg: KGIT

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Thailand

Source: Baker Hughes, Bloomberg, KGI Research

March 13, 2018

Commodities Update

Source: Bloomberg, KGI Research

*The Company may be issuer of Derivative Warrants on these securities. http://research.kgi.com; Bloomberg: KGIT

Please see back page for disclaimer

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Thailand

Commodities Update

Figure 3: Commodities table Commodity-prices

Last 9-Mar-18

1 Week 2-Mar-18

2017 29-Dec-17

WoW

YTD

1QTD18

4Q17

Average 3Q17

2Q17

1Q17

65.3 60.5 62.0 65.4 7.6

64.4 60.3 61.3 65.3 7.8

66.8 63.8 60.4 68.4 6.9

1.3 0.3 1.3 0.2 (3.2)

(2.3) (5.2) 2.7 (4.4) 9.6

66.9 64.2 62.8 69.0 6.9

61.9 59.4 55.8 63.4 7.2

52.0 50.8 48.3 52.2 8.3

50.2 49.2 48.1 50.8 6.4

54.2 52.9 51.9 55.9 6.4

+ PTTEP + PTTEP + PTTEP + PTTEP - TOP, PTTGC, BCP, IRPC, SPRC

1,250 1,035 1,400 1,310 935 510

1,185 1,040 1,400 1,310 1,020 517

1,330 950 1,275 1,180 960 565

5.5 (0.5) 0.0 0.0 (8.3) (1.3)

(6.0) 8.9 9.8 11.0 (2.6) (9.8)

1,279 1,035 1,355 1,256 1,009 536

1,264 917 1,260 1,156 910 529

1,138 888 1,151 1,110 887 432

1,033 815 1,128 1,057 746 406

1,167 894 1,181 1,089 870 456

+ PTTGC, SCC, IRPC - PTTGC, SCC, IRPC +/- PTTGC, SCC, IRPC +/- PTTGC, SCC, IRPC - PTTGC + PTTGC, SCC, IRPC

740 525 890 800 425

668 523 883 793 503

765 385 710 615 395

10.7 0.3 0.8 0.9 (15.5)

(3.2) 36.5 25.4 30.2 7.8

743 499 819 720 473

735 388 730 627 381

707 456 719 678 455

628 410 722 651 340

710 438 724 632 413

+ PTTGC, SCC, IRPC + PTTGC, SCC, IRPC + PTTGC, SCC, IRPC + PTTGC, SCC, IRPC - PTTGC

850 855

865 875

845 875

(1.7) (2.3)

0.6 (2.3)

868 907

801 836

745 758

721 763

795 911

- PTTGC, TOP - PTTGC, TOP

340 345

348 358

280 310

(2.4) (3.7)

21.7 11.5

332 366

272 306

313 327

315 357

339 455

- PTTGC, TOP - PTTGC, TOP

Coal Coal - BJI (US$/ton)

103.4

105.6

104.9

(2.1)

(1.5)

106.5

99.3

95.8

81.0

83.1

- BANPU, LANNA, UMS

Agricultural Broiler (Bt/kg.) Swine (Bt/kg.) Shrimp 70 pieces/kg. (Bt/kg.) Corn (USc/bu.) Soybean Meal (US$/ton) Sugar No.11 (USc/lb.)

31.5 43.5 184 391 374 12.8

31.5 45.0 181 385 393 13.4

31.5 41.5 169 351 317 15.2

0.0 (3.3) 1.5 1.4 (4.9) (4.3)

0.0 4.8 8.9 11.3 17.9 (15.3)

31.5 46.3 179 366 351 13.6

32.3 49.3 169 351 321 14.6

37.7 60.7 169 368 315 14.1

39.3 65.2 164 373 309 15.2

36.5 59.0 209 367 332 19.5

+/- CPF, GFPT, TFG - CPF, TFG + CPF, CFRESH - CPF, GFPT, TFG + CPF, GFPT, TFG, - TVO - KSL, KTIS, KBS, BRR

Oil/Refining Margins Brent (US$/bbl) Dubai (US$/bbl) WTI (US$/bbl) Tapis (US$/bbl) Singapore GRM (US$/bbl) Petrochemical Olefins Ethylene (US$/ton) Propylene (US$/ton) HDPE(US$/ton) PP (US$/ton) MEG (US$/ton) Naphtha (US$/ton) Spread Ethylene Spread (US$/ton) Propylene Spread (US$/ton) HDPESpread (US$/ton) PP Spread (US$/ton) MEG Spread (US$/ton) Aromatics Paraxylene (US$/ton) Benzene (US$/ton) Spread Paraxylene Spread (US$/ton) Benzene Spread ( US$/ton)

%Chg

Related Stock

Source: Bloomberg, BANPU Plc, PTTGC Plc, KGI Research

March 13, 2018

*The Company may be issuer of Derivative Warrants on these securities. http://research.kgi.com; Bloomberg: KGIT

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Thailand

Commodities Update

Figure 4: Crude Price

Figure 5: Singapore GRM

US$/bbl

US$/bbl

140

12

120

10

100

8

80

6

60 4

40

2

20

0 Jan-13

Nov-13

Sep-14 Brent

Aug-15 Dubai

Jun-16 WTI

Apr-17

Mar-18

0 Jan-13

Nov-13

Sep-14

Aug-15 Jun-16 Singapore GRM

Apr-17

Mar-18

Apr-17

Mar-18

Aug-15 Jun-16 PP-Spread

Apr-17

Mar-18

Aug-15

Apr-17

Mar-18

Source: Bloomberg

Source: Biznews

Figure 6: Ethylene Price, Ethylene Spread

Figure 7: Propylene Price, Propylene Spread

US$/ton

US$/ton

1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 Jan-13

1,600 1,400 1,200 1,000

800 600 400

200 Nov-13

Sep-14 Aug-15 Jun-16 Ethylene Ethylene-Spread

Apr-17

Mar-18

0 Jan-13

Nov-13

Sep-14 Aug-15 Jun-16 Propylene Propylene-Spread

Source: Bloomberg

Source: Bloomberg

Figure 8: HDPE price, HDPE Spread

Figure 9: PP price , PP Spread

US$/ton

US$/ton

1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 Jan-13

Nov-13

Sep-14 Aug-15 Jun-16 HDPE HDPE-Spread

Apr-17

Mar-18

1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 Jan-13

Nov-13

Sep-14 PP

Source: Bloomberg

Source: Bloomberg

Figure 10: PX Price, PX Spread

Figure 11: BZ Price, BZ Spread

US$/ton

US$/ton

1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 Jan-13

1,600 1,400 1,200 1,000

800 600 400 200 Nov-13

Source: Bloomberg

March 13, 2018

Sep-14

Aug-15 Jun-16 PX PX-Spread

Apr-17

Mar-18

0 Jan-13

Nov-13

Sep-14 BZ

Jun-16

BZ-Spread

Source: Bloomberg

*The Company may be issuer of Derivative Warrants on these securities. http://research.kgi.com; Bloomberg: KGIT

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Thailand

KGI Locations

China

Shanghai

Commodities Update

Room 1907-1909， Tower A, No. 100 Zunyi Road, Shanghai, PRC 200051 Room 24D1, 24/F, A Unit, Zhen Ye Building,2014 Bao’annan Road,

Shenzhen

Taiwan

Shenzhen, PRC 518008 Taipei

700 Mingshui Road, Taipei, Taiwan Telephone886.2.2181.8888 ‧

Hong Kong

Facsimile886.2.8501.1691

41/F CentralPlaza, 18 Harbour Road, Wanchai, Hong Kong Telephone 852.2878.6888

Thailand

Bangkok

Facsimile 852.2878.6800

8th - 11th floors, AsiaCentreBuilding 173 South Sathorn Road, Bangkok10120, Thailand Telephone 66.2658.8888

KGI's Ratings

Facsimile 66.2658.8014

Rating

Definition

Outperform (OP)

The stock's excess return* over the next twelve months is ranked in the top 40% of KGI's coverage universe in the related market (e.g. Taiwan).

Neutral (N)

The stock's excess return* over the next twelve months is ranked in the range between the top 40% and the bottom 40% of KGI's coverage universe in the related market (e.g. Taiwan).1.3

Under perform (U)

The stock's excess return* over the next twelve months is ranked in the bottom 40% of KGI's coverage universe in the related market (e.g. Taiwan).

Not Rated (NR)

The stock is not rated by KGI Securities.

Restricted (R)

KGI policy and/or applicable law regulations preclude certain typesofcommunications, including an investment recommendation, during the course of KGI's engagement in an investment banking transaction and in certain other circumstances.

Excess return = 12M target price/current priceNote

Disclaimer

March 13, 2018

KGI Securities no event shall profits, arising to buy or sell

When an analyst publishes a new report on a covered stock, we rank the stock's excess return with those of other stocks in KGI's coverage universe in the related market. We will assign a rating based on its ranking. If an analyst does not publish a new report on a covered stock, its rating will not be changed automatically. (Thailand) Plc. (“The Company”) disclaims all warranties with regards to all information contained herein. In the Company be liable for any direct, indirect or any damages whatsoever resulting from loss of income or by utilization and reliance on the information herein. All information hereunder does not constitute a solicitation any securities but constitutes our sole judgment as of this date and are subject to change without notice.

*The Company may be issuer of Derivative Warrants on these securities. http://research.kgi.com; Bloomberg: KGIT

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