Thai Oil PCL: Easing financial risk from deleveraging
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- 4Q25 net profit came in at THB2.45bn (-11% y/y, +15% q/q), lifted by full utilisation, and stronger performance of refinery and aromatics
- Market GIM of USD8.0/bbl (+57% y/y, +10% q/q), still above breakeven level of USD5.1/bbl
- Expect strong 1Q26F, supported by healthy refining and aromatics spreads
- Upgrade to HOLD rating with an FY26F TP of THB43
Outstanding 4Q25 despite large inventory loss. TOP reported 4Q25 net profit at THB2.45bn (-11% y/y, +15% q/q), in line with Bloomberg consensus. The weaker y/y performance was hit by a larger inventory loss impact. However, the stronger q/q performance was lifted by i) full utilisation, ii) healthy crack spreads, and iii) stronger aromatics margins.
Market GIM came in at USD8.0/bbl (+57% y/y, +10% q/q), above the breakeven cash cost of c.USD3.5/bbl. Normal profit came in at THB2.79bn (-14% y/y, +515% q/q).
TOP also announced a 2H25 dividend payment of THB1.0/share, with an XD date on 25 Feb 2026 (1H25 interim dividend payment of THB0.8/share).
4Q25 key operating metrics
- Refinery utilisation rate was at 114% (vs. 113% in 4Q24 and 82% in 3Q25), following a 30-day maintenance shutdown. In 4Q25, JET/GO/ULG/HSFO crack spreads stood at USD24.6/24.5/15.7/-7.0 per barrel (+53%/+31%/-52%/n.a. q/q). The stronger spreads were driven by a) tight global supply, b) winter demand and the travel season, and c) geopolitical conflict in Eastern Europe. Hence, market GRM came in at USD9.4/bbl (+84% y/y, +169% q/q).
- TOP booked a net inventory loss of c.THB3.46bn or USD3.8/bbl (vs. 4Q24’s loss of THB2.01bn and 3Q25’s gain of THB1.58bn) after the average Dubai price dropped by c.USD6.0/bbl. TOP also booked a hedging gain of THB66mn.
Aromatics utilisation rate was at 76% (vs. 80% in 4Q24 and 39% in 3Q25). On a 4Q25 basis, PX and BZ margins stood at USD153/tonne (+32% y/y, -1% q/q) and USD-10/tonne (from positive both y/y and q/q), respectively. The q/q margin deterioration was hit by an uptrend in feedstock cost (gasoline component) and slow downstream demand (auto and electronic appliance segments) during the long holiday period. Hence, aromatics market GIM contribution came in at USD1.0/bbl (-9% y/y, +100% q/q). - Lube base utilisation rate was at 90% (vs. 83% in 4Q24 and 67% in 3Q25). The 500SN margin stood at USD596/tonne (+5% y/y, -9% q/q). The narrower spread was pressured by an uptrend in feedstock cost such as fuel oil prices despite seasonal demand from logistics. Market GIM contribution came in at USD1.5/bbl (+36% y/y, +36% q/q), thanks to seasonal demand.
- Accounting GIM – including crude inventory impact – came in at USD8.1/bbl (vs. 4Q24’s USD5.1/bbl and 3Q25’s USD7.3/bbl), still above the breakeven level of c.USD5.1/bbl (operating cash cost/interest expense/depreciation expenses of USD3.5/0.6/1.6 per barrel).
- Extraordinary items in 4Q25 included a) a forex loss of THB307mn, and b) a THB328mn gain on negative goodwill from the acquisition of Chandra Asri Petrochemical.
Outlook
(-) Demand is growing at a slower pace. Yet, expected resilient market GRM in 1Q26. Global demand for refined fuels like gasoline, diesel, and jet fuel is expected to grow only modestly through 2026F and then stabilise by 2027F. We project worldwide consumption of refined oil products will peak around 2027F at roughly 86mbd – only a slight increase (under 1 mbd) from 2024’s levels. In other words, the era of rapid growth in fuel demand is concluding as factors like improved vehicle efficiency, increased adoption of electric vehicles, and slower economic growth temper the need for transport fuels. After 2027F, the use of gasoline and diesel is projected to decline steadily, offsetting any gains in jet fuel or petrochemical feedstock demand. This tepid demand outlook implies that refiners can no longer rely on booming consumption to absorb new supply; the market for fuels is expected to remain stable to soft moving into the late 2020s.
We expect softer refinery margins y/y in 2026F, particularly with demand in China (accounting for c.20% of global motor oil consumption) showing slow signs of recovery. As a result, we conservatively expect Singapore GRM at c.USD5.0/bbl for 2026F, a decrease from the 2025 level of c.USD5.0/bbl.
For 1Q26, we expect resilient refinery GRM, supported by i) falling crude OSP, and ii) resilient demand for heating oil due to a cold snap. On a 1Q26TD basis, JET/GO/ULG/HSFO crack spreads stood at USD20.7/21.1/9.3/-2.3 per barrel (-16%/-14%/-41%/n.a. q/q).
(+) Outstanding 1Q26F, lifted by both refinery and chemical segments. We expect outstanding 1Q26F business performance and outperformance against local peers. This is supported by i) expected outperforming market GRM, thanks to improving crack spreads as well as the downtrend in crude premium cost, and ii) seasonal demand for aromatics where PX and BZ margins, on a 1Q26TD basis, stood at USD273/tonne (+78% q/q) and USD116/tonne (vs USD-10/tonne in 4Q25).
CFP project update
(+) Secured subcontractors and potential 10-12% cost savings. CFP is progressing toward full COD by 3Q28F and potentially earlier than the target by one quarter. TOP has strengthened project control by directly contracting with all contractors and vendors, improving cost transparency and scheduling discipline. Wood (Foster Wheeler Thailand) was appointed as EPCM due to its strong familiarity with TOP’s standards and ability to mobilise quickly. TOP has awarded c.20 construction contracts, with the EPC construction workforce expected to increase from c.8,800 workers to c.15,000 workers by end of 1Q26. Under the EPCM framework, management expects capex savings of c.USD250-300mn (c.10-12% of the remaining capex of USD2.4bn).
(+/-) Volatility ahead despite construction progress. Although construction progress shows development in terms of target COD and expected cost savings, we remain cautious on project profitability as there will be more than 2 years until the commercialisation date in 2Q-3Q28, during which the market outlook could be unfavourable to CFP profitability.
First, we estimate the additional cost, or breakeven level, at around c.USD4.0/bbl. This comprises i) ongoing operating expense for catalyst changing of c.USD1.5/bbl, ii) depreciation expense of c.USD1.6/bbl (based on a 30-year asset life and 100% utilisation rate), and iii) additional interest cost of c.USD0.8/bbl (of which USD0.2/bbl is from c.USD1.0bn capitalised interest expense during the construction process, assuming TOP’s effective cost of debt at 4.0%).
We ran a test on the margin upside potential from the CFP project under different scenarios. Given the current situation of i) a gasoil and HSFO gap of USD26/bbl (13-year average at USD18/bbl) and ii) a light-heavy crude difference of USD6/bbl (13-year average stood at USD3.0/bbl), we found that current market conditions could lift overall margin by USD1.4/bbl or THB6.7bn/year should the CFP project start operations today. This is based on the assumptions of i) 10% HSFO upgrade to gasoil, ii) average refining utilisation rate of 100%, and iii) additional unit cost of USD4.0/bbl from CFP.
Since commercialisation will begin in 2Q-3Q28F, we expect margin volatility ahead, which could move unfavourably against the profitability of the CFP project, despite potential upside from higher heavy crude supply from Canada and Venezuela
Clear sign of CFP construction progress. Upgrade to HOLD rating. We upgrade our recommendation from FULLY VALUED to HOLD with a FY26F TP of THB43, based on 0.55x PBV which is 1.0 SD below the 5-year average. Our rating is supported by i) visible progress in CFP construction where management expects additional cost savings of up to c.USD300mn, and ii) an expectation of outstanding 1Q26F business performance, lifted by refinery margins, crude OSP downtrend, and improving aromatics margins.
In the long run, however, we anticipate a high breakeven cost of the CFP project at c.USD4.0/bbl, with more than 2 years until the commercialisation date in 2Q-3Q28 when the market outlook could be unfavourable to CFP profitability. In addition, the share price appreciated over 37% on a 2026TD basis, outperforming both SET Index and SETENERG. We expect a softer earnings outlook in 2Q26 as refining margins normalise. Thus, we recommend a HOLD rating.
Quarterly / Interim Income Statement (THB, mn) | |||||
FY Dec | 4Q2024 | 3Q2025 | 4Q2025 | % chg y/y | % chg q/q |
Revenue | 112,536 | 80,098 | 109,357 | (2.8) | 36.5 |
Cost of Goods Sold | (107,177.9) | (77,927.1) | (103,149.2) | (3.8) | 32.4 |
Gross Profit | 5,358.6 | 2,171.0 | 6,207.8 | 15.8 | 185.9 |
Other Oper. (Exp)/Inc | (1,132.1) | (830.8) | (1,390.7) | 22.8 | 67.4 |
Operating Profit | 4,226.5 | 1,340.3 | 4,817.1 | 14.0 | 259.4 |
Other Non Opg (Exp)/Inc | 653.8 | 431.6 | (619.1) | (194.7) | (243.4) |
Associates & JV Inc | 62.6 | (2.1) | (211.1) | (437.2) | 9952.4 |
Net Interest (Exp)/Inc | (985.8) | (835.4) | (707.6) | (28.2) | (15.3) |
Exceptional Gain/(Loss) | (487.1) | 1,693.0 | (332.7) | (31.7) | (119.7) |
Pre-tax Profit | 3,470.1 | 2,627.5 | 2,946.6 | (15.1) | 12.1 |
Tax | (722.7) | (497.8) | (458.5) | (36.6) | (7.9) |
Minority Interest | 19.4 | 17.1 | (29.8) | (253.6) | (274.3) |
Net Profit | 2,766.8 | 2,146.8 | 2,458.2 | (11.2) | 14.5 |
Net profit bef Except. | 3,253.8 | 453.8 | 2,791.0 | (14.2) | 515.0 |
EBITDA | 6,969.2 | 3,797.2 | 6,094.9 | (12.5) | 60.5 |
Gross Margins (%) | 4.8 | 2.7 | 5.7 |
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Opg Profit Margins (%) | 3.8 | 1.7 | 4.4 |
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Net Profit Margins (%) Source: DBSVTH | 2.5 | 2.7 | 2.2 |
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