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Issuer Flash: Thai Oil Public Company Limited - Q1/2026 Results

Issuer Flash: Thai Oil Public Company Limited - Q1/2026 Results

Report date: 2026-05-14 Event date: 2026-05-11 Event title: Q1 2026 Results

1. Flash Conclusion

Thai Oil's Q1 2026 results should be read, from a credit perspective, not as a structural improvement but as a phase in which liquidity, inventory losses, and policy intervention need to be monitored from Q2 onward following a temporary inventory gain and upside in refining margins. In the Q1/26 MD&A released on 2026-05-11, consolidated net profit was THB 19,481 million, EBITDA was THB 31,641 million, and GIM excluding stock gain/loss improved to USD 14.8/bbl. However, profit was lifted by a stock gain of THB 22,557 million and a gain on bond repurchases of THB 2,436 million, with a large timing gap between pre-crisis crude prices and post-crisis product prices.

The basic view in the latest issuer summary remains unchanged: Thai Oil is a domestically important refinery within the PTT group, but its bonds do not carry a government guarantee or PTT guarantee, and the credit profile is constrained by refining margins, inventory gains/losses, the Clean Fuel Project (CFP), and ratings close to the lower end of investment grade. The company disclosed that the Middle Eastern crude ratio, which was 91% in Q1/26, was reduced to 34% in April and 35% in May, which to some extent mitigates the risk of physical inability to procure crude. However, this does not mean the risk has disappeared; rather, it has changed form into risks related to crude premiums, freight, insurance, quality differences, and working capital associated with procurement switching.

The credit implication is neutral to slightly negative. Cash of THB 73,110 million and net debt/equity of 0.2x at end-Q1 provide a short-term buffer, but the company noted additional working capital of THB 18,000 million in Q2/26, a THB 2,800 million cash-flow reduction from the reduction in diesel ex-refinery selling prices, and THB 10,314 million of Oil Fuel Fund receivables, explaining that liquidity had declined by approximately THB 31,000 million. Q1 profit merely increased defensive funding; I do not view credit headroom as having improved permanently.

2. What Was Announced

On 2026-05-11, Thai Oil released its Q1 2026 MD&A, financial statements, and related disclosures. The company explained that the Middle East situation and logistics constraints around the Strait of Hormuz boosted refining margins and inventory gains in Q1, while these factors could work in the opposite direction from Q2 onward.

Metric Q1/26 Q4/25 Q1/25 Interpretation
GIM excluding stock gain/loss USD 14.8/bbl USD 11.8/bbl USD 5.4/bbl Underlying margins also improved
EBITDA THB 31,641 million THB 5,981 million THB 6,462 million Discount one-off factors
Net profit THB 19,481 million THB 2,458 million THB 3,504 million Should not be annualised
Stock gain/loss THB 22,557 million THB -3,461 million THB 1,080 million Reversible earnings
Net debt/equity 0.2x 0.3x 0.8x Metrics improved, but Q2 onward needs confirmation

The improvement in refining margins was mainly driven by wider spreads of jet fuel/kerosene and diesel against Dubai crude. Meanwhile, Q1/26 crude procurement consisted of 91% Middle East, 6% domestic, 2% Far East, and 1% West Africa, but this changed to 34% Middle East in April and 35% Middle East in May. The decline in the Middle Eastern crude ratio in April-May, which had been unverified in the additional discussion, can now be treated as a confirmed fact in the official MD&A.

3. Credit Read-Through

First, the quality of Q1 earnings is not strong. The improvement in GIM excluding stock gain/loss is positive, but the sharp increase in EBITDA and net profit depends heavily on the stock gain. The company itself also explains that if the geopolitical situation normalises and crude prices decline, this could turn into a stock loss. Therefore, from Q2 onward, the focus should be on GIM excluding stock gain/loss, operating cash flow, cash balance, and inventory levels rather than headline net profit.

Second, the nature of crude procurement risk has changed. Reducing the Middle Eastern ratio to 34-35% in April and May is positive in terms of crude slate flexibility and mitigates the immediate risk of operational stoppage. However, alternative crude can pressure profitability and working capital.

Third, domestic importance is a support, but it also comes with policy costs. The company maintained high utilisation of 110-113% from March to April 2026, but the NEPC's reduction in diesel ex-refinery selling prices, constraints on product exports, and Oil Fuel Fund receivables show that, in a crisis, refineries cannot operate purely to maximise profit.

Fourth, there is no direct new deterioration in relation to the CFP, but given the remaining CFP investment of USD 1,648 million, the planned completion in Q3 2028, and the Negative rating outlook, the cash added in Q1 is defensive funding until completion. If inventory losses, cash outflows from policy factors, and alternative crude costs emerge simultaneously from Q2 onward, the margin of safety at Baa3/BBB- will not expand.

4. What To Watch Next

The most important next check is the Q2/26 results. First, it will be necessary to see how the changes in procurement mix in April and May are reflected in crude premiums, freight, insurance costs, yields, and GIM.

Second, the reversal of the stock gain should be confirmed. Even if headline net profit declines, credit deterioration would be limited if GIM excluding stock gain/loss and operating cash flow are protected. Conversely, if inventory losses and a decline in underlying margins occur at the same time, Q1 strength will have been temporary.

Third, liquidity should be broken down. The additional working capital of THB 18,000 million, the THB 2,800 million impact from the diesel price reduction, and the THB 10,314 million of Oil Fuel Fund receivables are cash issues. The timing of receivable collection, short-term borrowings, committed lines, crude procurement terms, and transaction terms with PTT should be checked.

Fourth, the remaining CFP construction and capital expenditure should continue to be monitored. The Q1 results did not indicate new deterioration in the CFP itself, but the more cash declines, the more funding headroom until CFP completion becomes central to the credit assessment.

5. Sources

6. Unverified / Pending