ptt public company limited ratings · factors that could, individually or collectively, lead to...

Corporates

Energy (Oil & Gas) Thailand

Rating Report │ 18 May 2020

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PTT Public Company Limited

PTT Public Company Limited's ratings reflect its Standalone Credit Profile (SCP) of 'bbb+', which is at the same level as the Thai sovereign rating (BBB+/Stable). PTT's ratings will remain equalised with those of the sovereign under Fitch Ratings’ Government-Related Entities Rating Criteria if the SCP weakens, provided our assessment of PTT under the criteria remains unchanged. PTT's SCP reflects its integrated business model and strong financial position.

Key Rating Drivers Strong Likelihood of Support: Fitch regards PTT's status, ownership and control by the sovereign as 'Moderate'; the state owns 51% directly and appoints PTT’s board. We see the support record and expectations of state support as 'Strong'. There has been no explicit tangible financial state support due to PTT's strong financial position, but we believe support would be forthcoming, if needed, in light of PTT's strategic role in Thailand's oil and gas sectors. We believe the socio-political implications of a default by PTT are 'Strong', as a default would significantly affect gas availability in Thailand, which in turn could cut electricity generation and lower the country's energy security. We also see the financial implications of a default as 'Strong', as a default could limit domestic and foreign financing options and increase financing costs for the state and government-related entities. Earnings Pressure: PTT will face downward pressure on its credit metrics in 2020 because of lower oil and petrochemical prices, which are likely to dampen earnings from its gas-separation plants and natural gas sales to industrial users. We also forecast weaker operating cash flow, caused by lower demand as a result of coronavirus pandemic-related disruption in the downstream refining and petrochemical business. Operating cash flow should improve in 2021, along with a general rise in demand, once the pandemic is resolved, but is likely to remain below 2019 levels. Lower Impact on Upstream: We expect PTT's operating cash flow from upstream operations to decrease by less than our expected fall in crude oil prices due to high natural gas sales (71% of volume) and some hedges of its oil production at higher prices. The selling price of natural gas is about 30% indexed to fuel-oil prices; it takes approximately three to 24 months to adjust, depending on the gas-supply contract. SCP Headroom to Reduce: Fitch expects PTT's financial profile to stay adequate for its 'bbb+' SCP, although headroom is likely to shrink. We forecast PTT's FFO net leverage to weaken to about 2.5x in 2020 (2019: 1.6x) and improve towards 2.0x over the medium term. Some Flexibility on Capex: Fitch expects consolidated capex to rise in 2020 (2019: THB159 billion), driven by investments in subsidiaries. Its downstream subsidiaries have committed projects to complete in 2020-2022. PTT and PTT Exploration and Production Public Company Limited (PTTEP, BBB+/Stable), PTT's upstream arm, have flexibility in their investment plans. PTT has room to reduce capex by 20%-30% in 2020, while PTTEP has about 15%-20%, according to the companies. Both may review medium-term plans if the market fails to recover in 2021. Improving Upstream Operation: The reserve profile of PTTEP has improved following acquisitions in 2019 and contract wins. Its proved reserved life increased to 7.5 years in 2019, from 5.2 years in 2018. The company expects to maintain the reserve life at about seven years over the next three years. PTTEP's

Ratings

Rating Type Rating Outlook Last Rating Action

Long-Term IDR

BBB+ Stable Affirmed 30 Apr 20

Long-Term Local-Currency IDR

BBB+ Stable Affirmed 30 Apr 20

National Long-Term Rating

AAA (tha)

Stable Affirmed 30 Apr 20

Click here for full list of ratings

Applicable Criteria and Related Research

National Scale Ratings Criteria (July 2018)

Corporates Notching and Recovery Ratings Criteria (October 2019)

Corporate Hybrids Treatment and Notching Criteria (November 2019)

Government-Related Entities Rating Criteria (November 2019)

Short-Term Ratings Criteria (March 2020)

Corporate Rating Criteria - Effective from 27 March 2020 to 1 May 2020 (March 2020)

Sector Navigators-Addendum to the Corporate Rating Criteria - Effective from 27 March 2020 to 1 May 2020 (March 2020)

Analysts

Muralidharan Ramakrishnan +65 6796 7236 [email protected] Lertchai Kochareonrattanakul +66 2 108 0158 [email protected]

https://www.fitchratings.com/entity/ptt-public-company-limited-80776379

https://app.fitchconnect.com/search/research/article/RPT_10038626













mailto:%[email protected]

mailto:%[email protected]

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production profile has also improved, with rising production forecast for the next five years despite a challenging 2020. PTTEP plans to bring new fields to the production stage in 2020-2021. New contracts at the Erawan and Bongkot fields will drive production in 2022-2023. Integrated Model: PTT's ratings reflect its integrated business model, which helps to smooth out earning volatility over the medium term. Its large mid-and-downstream operation, which includes gas sales and distribution, oil retailing, oil refining and petrochemicals, has provided a buffer against the large earning deterioration in the upstream operations since 2H14. Stable Cash Flow from Gas: PTT's financial profile benefits from relatively stable cash flow in its natural gas business compared with its oil business. Its natural gas business is underpinned by steady demand and long-term supply and sales agreements with take-or-pay conditions on a cost-plus pricing structure. The profitability of its gas transmission and liquefied natural gas receiving terminal operations, as well as the sale of natural gas to power producers and gas-separation plants, is resilient to oil and gas price fluctuations, due to fixed fee and cost-plus pricing. However, the earnings of gas-separation plants and natural gas sales to industrial users are more exposed, as the cost adjustment of gas purchases – which are based on long-term contracts – lags that of product prices.

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Financial Summary

(THBm) Dec 2018 Dec 2019 Dec 2020F Dec 2021F

Gross revenue 2,336,155 2,219,739 1,683,692 1,876,163

Operating EBITDA (before income from associates) 351,396 293,191 181,563 218,886

FFO margin (%) 11.5 9.1 8.6 9.4

FFO fixed charge coverage (x) 9.1 7.2 5.0 6.0

FFO adjusted net leverage (x) 0.7 1.7 2.7 2.4

Source: Fitch Ratings, Fitch Solutions

Rating Derivation Relative to Peers PTT is the largest fully integrated oil and gas company in Thailand. It is the sole operator in mid- and downstream gas operations, one of Thailand's major upstream producers, and a dominant player in the oil and petrochemicals industries. We assess PTT's status, ownership and control as 'Moderate', compared with our 'Strong' assessment for Malaysia's Petroliam Nasional Berhad (PETRONAS) (A-/Negative), due to a lower degree of government involvement in PTT's investment strategy and operations. We assess PTT's support record and expectation factor as 'Strong', in line with that of PETRONAS, which has also received only limited tangible financial support in light of its strong financial profile. However, we believe both companies are likely to receive support, if needed. We assess PETRONAS's and China National Petroleum Corporation's (CNPC, A+/Stable) socio-political implications of default as 'Very Strong', based on their importance to the economy and the state, while PTT's 'Strong' assessment reflects its lower market share in petroleum product sales of around 40% in Thailand, with private operators competing in this space. Fitch assesses the financial implications of default for PTT as 'Strong', compared with 'Very Strong' for PETRONAS and CNPC, because PTT is not viewed as close to being a proxy government borrower as PETRONAS and CNPC, despite being one of Thailand's key government-related entity borrowers. PTT's SCP of 'bbb+' reflects its integrated business model and medium-sized operating scale, although it is significantly smaller than that of CNPC and PETRONAS, whose ratings are constrained by their sovereigns. PTT has larger operating scale, in terms of sales and EBITDA, than Austria’s OMV AG (A-/Negative) and Spain’s Repsol, S.A. (BBB/Stable), but a slightly weaker reserve profile. PTT has similar credit metrics to OMV, but OMV operates in lower-risk countries. PTT has stronger credit metrics than Repsol.

Navigator Peer Comparison

IDR/Outlook

A/Sta aa- n aa n a+ n aa n bbb n aa- n aa- n bbb n a nA+/Sta bbb+ n a- n aa- n aa+ n bbb n aa n a+ n a- n a- nA-/Sta aa- n aa- n a+ n bb n a n bbb n bbb+ n bbb+ n a+ nNR/ a- n bbb+ n aa- n aa- n bbb+ n a+ n a+ n aa n aa- nBBB+/Sta a- n bbb+ n a+ n bb n bb+ n bbb n bbb n a- n bbb+ nBBB/Pos a+ n aa- n a+ n bbb+ n bb+ n bbb n bbb+ n bbb n bbb+ n

Source: Fitch Ratings. Importance n Higher n Moderate n Lower

Financial

Structure

Financial

Flexibility

Financial profileIssuer

Management and

Corporate

Governance Diversification

Proved

Reserves Cash Flow Cycle Production Size Profitability

Operating

Environment

Business profile

Petroliam Nasional Berhad (PETRONAS)


Repsol, S.A.

BP plc

China National Petroleum Corporation

OMV AG

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Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade:

An upgrade of Thailand's IDR, provided the likelihood of support remains intact

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade:

A downgrade of Thailand's ratings

Factors that May Lead to a Deterioration in PTT's SCP:

Large debt-funded investment or weaker operating cash flow, resulting in a sustained deterioration in FFO net leverage to over 2.8x

Adverse changes to regulations, gas sales contracts or pipeline tariffs.

Rating Sensitivities for Thailand sovereign

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade:

A resumption of resilient growth without the emergence of imbalances

Lower social and political tensions, for instance, reflected by improved governance and development indicators or a record of political stability

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade:

Renewed political disruption on a scale sufficient to affect Thailand's economy

A significant and sustained rise in Thailand's government-debt ratios; for example, due to fiscal deterioration or the appearance of contingent liabilities on the sovereign balance sheet

Liquidity and Debt Structure Strong Liquidity: PTT's liquidity is supported by available cash of THB309.9 billion at end-2019, against THB94.9 billion of debt maturing within 12 months. Its liquidity is also supported by solid cash flow generation and access to the debt capital markets and bank funding. PTT's debt maturity profile remains comfortable, with an average term to maturity of 9.2 years.

IDR/Outlook

A/Sta 2.0 n 3.0 n 1.0 n 3.0 n -3.0 n 2.0 n 2.0 n -3.0 n 0.0 nA+/Sta -3.0 n -2.0 n 1.0 n 3.0 n -4.0 n 2.0 n 0.0 n -2.0 n -2.0 nA-/Sta 3.0 n 3.0 n 2.0 n -5.0 n 1.0 n -2.0 n -1.0 n -1.0 n 2.0 nNR/ 16.0 n 15.0 n 19.0 n 19.0 n 15.0 n 18.0 n 18.0 n 20.0 n 19.0 nBBB+/Sta 1.0 n 0.0 n 3.0 n -4.0 n -3.0 n -1.0 n -1.0 n 1.0 n 0.0 nBBB/Pos 4.0 n 5.0 n 4.0 n 1.0 n -2.0 n 0.0 n 1.0 n 0.0 n 1.0 n

Source: Fitch Ratings. n Worse posit ioned than IDR n In line with IDR n Better posit ioned than IDR



Repsol, S.A.

Profitability

Financial

Structure

Financial

FlexibilityCash Flow Cycle

Issuer Financial profile

Operating

EnvironmentName

Management and

Corporate

Governance Diversification

Proved

Reserves Production Size

Business profile

OMV AG

BP plc


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ESG Considerations

The highest level of ESG credit relevance, if present, is a score of 3. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity(ies), either due to their nature or to the way in which they are being managed by the entity(ies). For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg.

http://www.fitchratings.com/esg

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Liquidity and Debt Maturity Scenario with No Refinancing

Available liquidity (THBm) 2020F 2021F

Beginning cash balance 309,907 145,002

Rating case FCF after acquisitions and divestitures -70,025 -28,927

Total available liquidity (A) 239,882 116,074

Liquidity uses

Debt maturities -94,880 -99,107

Total liquidity uses (B) -94,880 -99,107

Liquidity calculation

Ending cash balance (A+B) 145,002 16,967

Revolver availability 0 0

Ending liquidity 145,002 16,967

Liquidity score 2.5 1.2

Source: Fitch Ratings, Fitch Solutions, PTT

Scheduled debt maturities Original

Statement date 31 March 2019

2020 94,880

2021 99,107

2022 75,629

2023 48,173

2024 72,522

Thereafter 262,596

Total 652,908


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Key Assumptions Fitch's Key Assumptions Within Our Rating Case for the Issuer

Benchmark Brent crude at USD35/barrel (bbl) in 2020, USD45/bbl in 2021, USD53/bbl in 2022, and USD55/bbl thereafter

Exploration and production business sales volume to increase by about 5% CAGR in 2020-2024 (2019: 15%)

EBITDA from the gas, petrochemical and refining businesses to fall in 2020 due to weak demand

Capex to increase in 2020-2021 (2019: THB159 billion)

Dividend payout at about 50%

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Financial Data

Historical Forecast

(THBm) Dec 2017 Dec 2018 Dec 2019 Dec 2020F Dec 2021F Dec 2022F

Summary income statement

Gross revenue 1,995,722 2,336,155 2,219,739 1,683,692 1,876,163 1,987,324

Revenue growth (%) 16.1 17.1 -5.0 -24.1 11.4 5.9

Operating EBITDAR 347,280 355,437 299,170 187,541 224,865 262,789

Operating EBITDAR margin (%) 17.4 15.2 13.5 11.1 12.0 13.2

Operating EBIT 229,106 227,840 159,987 35,932 65,795 97,693

Operating EBIT margin (%) 11.5 9.8 7.2 2.1 3.5 4.9

Gross interest expense -30,993 -28,942 -31,489 -28,506 -28,642 -30,335

Pretax income (including associate income/loss) 212,917 219,057 155,080 15,994 44,793 75,543

Summary balance sheet

Readily available cash and equivalents 344,702 398,792 309,907 195,002 216,967 249,594

Total debt with equity credit 567,715 581,866 655,917 611,036 661,929 686,300

Total adjusted debt with equity credit 582,794 614,191 703,743 658,863 709,756 734,127

Net debt 223,013 183,074 346,009 416,035 444,962 436,706

Summary cash flow statement

Operating EBITDA 345,395 351,396 293,191 181,563 218,886 256,811

Cash interest paid -30,893 -28,148 -25,462 -28,506 -28,642 -30,335

Cash tax -33,958 -45,371 -65,259 -3,359 -9,407 -15,864

Dividends received less dividends paid to minorities (inflow/(out)flow)

-12,407 -23,113 -16,584 -10,511 -8,165 -8,850

Other items before FFO 7,897 5,819 10,512 0 0 0

Funds flow from operations 283,538 268,942 202,823 144,238 176,796 206,429

FFO margin (%) 14.2 11.5 9.1 8.6 9.4 10.4

Change in working capital -13,235 -44,043 26,663 31,535 -14,894 -8,646

Cash flow from operations (Fitch defined) 270,303 224,899 229,485 175,772 161,901 197,783

Total non-operating/non-recurring cash flow 0 0 0

Capital expenditure -143,186 -118,359 -158,610

Common dividends -51,413 -57,108 -59,979

Free cash flow 75,705 49,432 10,896

Net acquisitions and divestitures -2,253 -24,786 -160,084

Other investing and financing cash flow items -41,114 27,729 -18,275 0 0 0

Net debt proceeds -64,917 1,623 60,231 -44,880 50,893 24,371

Net equity proceeds 7,145 93 18,346 0 0 0

Total change in cash -25,434 54,091 -88,885 -114,906 21,966 32,626

Calculations for forecast publication

Capex, dividends, acquisitions and other items before FCF -196,852 -200,253 -378,673 -245,798 -190,829 -189,528

Coverage ratios

FFO interest coverage (x) 9.9 10.3 8.7 5.9 7.0 7.7

FFO fixed charge coverage (x) 9.4 9.1 7.2 5.0 6.0 6.6

Operating EBITDAR/interest paid + rents (x) 9.4 9.8 9.0 5.1 6.3 7.0

Operating EBITDA/interest paid (x) 9.9 11.0 10.9 6.0 7.4 8.2

Leverage ratios

Total adjusted debt/operating EBITDAR (x) 1.9 2.0 2.5 3.7 3.3 2.9

Total adjusted net debt/operating EBITDAR (x) 0.8 0.7 1.4 2.6 2.3 1.9

Total debt with equity credit/operating EBITDA (x) 1.9 1.9 2.4 3.6 3.1 2.8

FFO adjusted leverage (x) 1.9 2.1 3.1 3.8 3.4 3.1

FFO adjusted net leverage (x) 0.8 0.7 1.7 2.7 2.4 2.0

FFO leverage (x) 1.8 2.0 3.0 3.6 3.3 3.0

FFO net leverage (x) 0.7 0.6 1.6 2.5 2.2 1.9

Additional METRICS

CFO-capex/total debt with equity credit (%) 22.4 18.3 10.8 -6.3 -3.7 1.8

CFO-capex/total net debt with equity credit (%) 57.0 58.2 20.5 -9.3 -5.5 2.9


How to Interpret the Forecast Presented

The forecast presented is based on Fitch Ratings’ internally produced, conservative rating case forecast. It does not represent the forecast of the rated issuer. The forecast set out above is only one component used by Fitch Ratings to assign a rating or determine a rating outlook, and the information in the forecast reflects material but not exhaustive elements of Fitch Ratings’ rating assumptions for the issuer’s financial performance. As such, it cannot be used to establish a rating, and it should not be relied on for that purpose. Fitch Ratings’ forecasts are constructed using a proprietary internal forecasting tool, which employs Fitch Ratings’ own assumptions on operating and financial performance that may not reflect the assumptions that you would make. Fitch Ratings’ own definitions of financial terms such as EBITDA, debt or free cash flow may differ from your own such definitions. Fitch Ratings may be granted access, from time to time, to confidential information on certain elements of the issuer’s forward planning. Certain elements of such information may be omitted from this forecast, even where they are included in Fitch Ratings’ own internal deliberations, where Fitch Ratings, at its sole discretion, considers the data may be potentially sensitive in a commercial, legal or regulatory context. The forecast (as with the entirety of this report) is produced strictly subject to the disclaimers set out at the end of this report. Fitch Ratings may update the forecast in future reports but assumes no responsibility to do so. Original financial statement data for historical periods is processed by Fitch Solutions on behalf of Fitch Ratings. Key financial adjustments and all financial forecasts credited to Fitch Ratings are generated by rating agency staff.

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Ratings Navigator

Corporates Ratings NavigatorOil & Gas Production

aaa AAA Stable

aa+ AA+ Stable

aa AA Stable

aa- AA- Stable

a+ A+ Stable

a A Stable

a- A- Stable

bbb+ BBB+ Stable

bbb BBB Stable

bbb- BBB- Stable

bb+ BB+ Stable

bb BB Stable

bb- BB- Stable

b+ B+ Stable

b B Stable

b- B- Stable

ccc+ CCC+ Stable

ccc CCC Stable

ccc- CCC- Stable

cc CC Stable

c C Stable

d or rd D or RD Stable

Management and

Corporate Governance

Factor

LevelsSector Risk Profile Operating Environment

Financial FlexibilityFinancial StructureProfitabilityProduction SizeCash Flow CycleProved ReservesDiversification and

Environmental Risk

Business Profile Financial Profile

Issuer Default Rating

ESG Relevance:PTT Public Company Limited

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Operating Environment Management and Corporate Governance

a bbb a a

a- aa a- bbb

bbb bbb+ bbb

b- bbb bbb

ccc+ bbb-

Diversification and Environmental Risk Proved Reserves

aa aa bbb- bb

aa- bbb bb+

a+ bb

a bb-

a- b+

Cash Flow Cycle Production Size

bbb bb a- bbb

bbb- bbb+

bb+ bbb

bb bbb-

bb- bb+

Profitability Financial Structure

a- bbb a+ bbb

bbb+ bbb a a

bbb a- bbb

bbb- bbb+

bb+ bbb

Financial Flexibility Credit-Relevant ESG Derivation

For further details on Credit-Relevant ESG scoring, see page 3.

FFO Leverage

Total Debt With Equity Credit/Op. EBITDA

FFO ($)

Free Cash Flow

Financial Access

Economic Environment

Liquidity a

aClear commitment to maintain a conservative policy with only modest deviations

allowed.

Op. EBITDA/Interest Paid bbb

Very comfortable liquidity. No need to use external funding in the next 12 months even

under a severe stress scenario. Well-spread debt maturity schedule. Diversified sources of

funding.

9.0x

a-

FX Exposure bbbSome FX exposure on profitabil ity and/or debt/cash flow match. Effective hedging in

place.

FFO Interest Coverage bbb

Diversif ication

Environmental Risk


Average combination of countries where economic value is created and where assets are

located.

Very strong combination of issuer specific funding characteristics and of the strength of

the relevant local financial market.Governance Structure

Management Strategy

Systemic Governance

Production (thousand boe/day)

Systemic governance (eg rule of law, corruption; government effectiveness) of the issuer’s

country of incorporation consistent with ‘bbb’.

Neutral to negative across the cycle.

100%

$4 bil l ion

Capex/CFO (%)

Overall ESG

PTT Public Company Limited has 12 ESG potential rating driversFinancial Discipline

bbb-

issues

driverbbb+

bbb

a

issues

issues

4

3

not a

rating

driver

5

2issues

issues

0

0

12

1

1

potential

driver

FFO Net Leverage

Integrated players benefitting from diversity and spread of volatil ity, which smooths out

projects. Ratings limited by scale of operations.

Moderate exposure to environmental regulations and/or material but manageable

remediation costs relative to projected cash flows.

Group Structure

Financial Transparency

0.4 bil l ion-1.5 bil l ion

Coherent strategy and good track record in implementation.

Good CG track record but effectiveness/independence of board less obvious. No evidence of abuse

of power even with ownership concentration.

Some group complexity leading to somewhat less transparent accounting statements. No

significant related-party transactions.

Good quality reporting without significant fail ing. Consistent with the average of l isted companies

in major exchanges.

Reserve Base (boe)

key

driver

Emissions from OGP production

Energy use in OGP operations

Water management (e.g. usage levels, recycling capacity)

Waste and material handling; operations proximity to environmentally sensitive areas

Hydrocarbon reserves exposure to present/future regulation and environmental costs

Operations proximity to areas of conflict or indigenous lands

7.5x

1Showing top 6 issues

How to Read This Page: The left column shows the three-notch band assessment for the overall Factor, illustrated by a bar. The

right column breaks down the Factor into Sub-Factors, with a description appropriate for each Sub-Factor and its corresponding

category.

2.8x

2.0x

2.5x

175 - 700

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Credit-Relevant ESG Derivation

Environmental (E)

E Score

Social (S)

S Score

Governance (G)

G Score

Water management (e.g. usage levels, recycling capacity)

Waste and material handling; operations proximity to environmentally

sensitive areas

n.a.

Social resistance to major projects or operations that leads to delays and

cost increases

Sector-Specific Issues

Hydrocarbon reserves exposure to present/future regulation and

environmental costs

Reference

Impact of labor negotiations and employee (dis)satisfaction

Worker safety and accident prevention

Quality and timing of f inancial disclosure

Diversif ication and Environmental Risk; Profitability;

Financial Flexibility

n.a.

Profitability; Financial Structure; Financial Flexibility 3

1

issues

issues

issues

issues

issues

key driver

driver

potential driver

not a rating driver

0

0

12

1

1

Highly relevant, a key rating driver that has a significant impact on the rating

on an individual basis. Equivalent to "higher" relative importance within

Navigator.

Relevant to rating, not a key rating driver but has an impact on the rating in

combination with other factors. Equivalent to "moderate" relative importance

within Navigator.

Minimally relevant to rating, either very low impact or actively managed in a

way that results in no impact on the entity rating. Equivalent to "lower" relative

importance within Navigator.

Irrelevant to the entity rating and irrelevant to the sector.

5

General Issues G Scale

Management Strategy 3 5Strategy development and implementation

ReferenceSector-Specific Issues

1

Governance Structure 3 4

3

2

How relevant are E, S and G issues to the overall credit rating?

5

Management and Corporate Governance


Financial Transparency 3 2 Irrelevant to the entity rating but relevant to the sector.

4



Production Size; Profitability; Financial Structure; Financial

Flexibility

Human Rights, Community Relations, Access &

Affordability3

Employee Wellbeing 2

Exposure to Social Impacts

Group Structure 3 3



Board independence and effectiveness; ow nership concentration

Complexity, transparency and related-party transactions

3

CREDIT-RELEVANT ESG SCALE

How to Read This Page

ESG scores range from 1 to 5 based on a 15-level color gradation. Red (5) is

most relevant and green (1) is least relevant.

The Environmental (E), Social (S) and Governance (G) tables break out the

individual components of the scale. The right-hand box shows the aggregate E,

S, or G score. General Issues are relevant across all markets with Sector-

Specific Issues unique to a particular industry group. Scores are assigned to

each sector-specific issue. These scores signify the credit-relevance of the

sector-specific issues to the issuing entity's overall credit rating. The Reference

box highlights the factor(s) within which the corresponding ESG issues are

captured in Fitch's credit analysis.

The Credit-Relevant ESG Derivation table shows the overall ESG score. This

score signifies the credit relevance of combined E, S and G issues to the

entity's credit rating. The three columns to the left of the overall ESG score

summarize the issuing entity's sub-component ESG scores. The box on the far

left identifies the some of the main ESG issues that are drivers or potential

drivers of the issuing entity's credit rating (corresponding with scores of 3, 4 or 5)

and provides a brief explanation for the score.

Classification of ESG issues has been developed from Fitch's sector ratings

criteria. The General Issues and Sector-Specific Issues draw on the

classification standards published by the United Nations Priniciples for

Responsible Investing (PRI) and the Sustainability Accounting Standards

Board(SASB).

2

1

Customer Welfare - Fair Messaging, Privacy &

Data Security1

GHG Emissions & Air Quality

Water & Wastew ater Management

PTT Public Company Limited has exposure to energy productivity risk but this has very low impact on the rating.

S Scale

General Issues

Emissions from OGP production

Energy use in OGP operations

Showing top 6 issues

Diversif ication and Environmental Risk; Profitability



2

3

1

5

4

Operations proximity to areas of conflict or indigenous lands

Labor Relations & Practices 3

Energy Management



General Issues

Waste & Hazardous Materials Management;

Ecological Impacts

Exposure to Environmental Impacts

4

Overall ESG Scale

3

3

3

E ScaleReferenceSector-Specific Issues

Diversif ication and Environmental Risk; Profitability 4

3

5

3

PTT Public Company Limited has exposure to w ater management risk but this has very low impact on the rating.

1


3

2

PTT Public Company Limited has exposure to w aste and impact management risk but this has very low impact on the rating.

PTT Public Company Limited has exposure to extreme w eather events but this has very low impact on the rating.

PTT Public Company Limited has exposure to emissions regulatory risk but this has very low impact on the rating.

PTT Public Company Limited has 12 ESG potential rating drivers

PTT Public Company Limited has exposure to land rights/conflicts risk but this has very low impact on the rating.

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Simplified Group Structure Diagram


Ministry of Finance

PTTDebentures:

- THB currency: THB83.7bn

- Foreign currency: THB8.8bn

Loans: THB24.9bn

E&P and Gas Oil Petrochemicals & Refining Coal & Mining

PTT Tank

Terminal

PTT Oil & Retail

Business

12.2% 51.1% 36.7%

PTT Explorat ion & ProductionForeign currency debentures: THB81.6bn

Loans: THB17.9bn

Subordinated capital debentures: THB6.0bn

PTT Natural Gas

Distribut ion

PTT LNG

PTT Green

Energy

PTT Global

Management

100%

100%

40%

100%

Vayupak Fund Public

Energy

Complex

PTT Treasury

CenterForeign currency

debentures:

THB17.2bn

Business

Services

Alliance

Trans Thai-

Malaysia

(Thailand)

Trans Thai-

Malaysia

(Malaysia)

District Cooling

System and

Power Plant

Others

65.3%

58%100%

100%

35% (JV)

50% (JV)

100%

50% (JV)

50%

100%

PTT Global ChemicalDebentures:

- THB currency: THB40bn


Loans: THB37.0bn

Thai OilDebentures:



Loans: THB21.0bn

IRPCDebentures:


Loans: THB52.2bn

Global Power SynergyDebenture: THB52.7bn

Loans: THB53.4bn

PTT Global LNG

PTT Energy

Solut ions

47.9%

47.5%

47.5%

50%

22.6%

Map Ta Phut Air

Products

49% (JV)

Corporates




fitchratings.com 13

Peer Financial Summary

Company IDR

Financial statement date

Gross revenue (USDm)

Operating EBITDA (before income

from associates)

(USDm) FFO margin

(%)

FFO fixed charge

coverage (x)

FFO adjusted net leverage (x)


BBB+

BBB+ 2018 72,245 10,867 11.5 9.1 0.7

BBB+ 2017 59,017 10,214 14.2 9.4 0.8

BBB+ 2016 48,711 8,857 14.3 8.0 1.1

BP plc A

A 2018 298,756 32,512 9.2 6.0 2.3

A 2017 240,208 26,190 9.2 4.6 2.7

A 2016 183,008 16,727 7.5 3.6 3.7


A+

A+ 2018 413,697 66,932 12.6 9.0 1.3

A+ 2017 347,328 57,542 13.2 7.5 1.7

A+ 2016 281,756 44,891 15.9 7.2 2.0

OMV AG A-

A- 2018 27,052 5,843 17.7 11.2 1.1

A- 2017 22,857 4,686 18.0 10.2 1.2

A- 2016 21,300 3,581 16.0 8.0 1.9


A-

A- 2018 60,771 26,382 36.1 20.4 -0.9

A- 2017 51,322 21,787 31.5 15.3 -0.5

A- 2016 46,112 13,736 29.9 12.9 -0.7

Repsol, S.A. BBB

BBB 2018 58,636 6,603 9.0 6.5 1.7

BBB 2017 46,617 5,930 11.3 5.6 2.2

BBB 2016 38,217 4,161 9.5 4.0 3.3


Corporates




fitchratings.com 14

Reconciliation of Key Financial Metrics

Reconciliation of Key Financial Metrics for PTT Public Company Limited

(THB Millions, As reported) 31 Dec 2019

Income Statement Summary

Operating EBITDA 293,191

+ Recurring Dividends Paid to Non-controlling Interest -21,372

+ Recurring Dividends Received from Associates 4,788

+ Addit ional Analyst Adjustment for Recurring I/S Minorit ies and Associates 0

= Operating EBITDA After Associates and Minorities (k) 276,607

+ Operating Lease Expense Treated as Capitalised (h) 5,978

= Operating EBITDAR after Associates and Minorities (j) 282,585

Debt & Cash Summary

Total Debt with Equity Credit (l) 655,917

+ Lease-Equivalent Debt 47,827

+ Other Off-Balance-Sheet Debt (p) 0

= Total Adjusted Debt with Equity Credit (a) 703,743

Readily Available Cash [Fitch-Defined] 309,907

+ Readily Available Marketable Securit ies [Fitch-Defined] 0

= Readily Available Cash & Equivalents (o) 309,907

Total Adjusted Net Debt (b) 393,836

Cash-Flow Summary

Preferred Dividends (Paid) (f) 0

Interest Received 6,425

+ Interest (Paid) (d) -25,462

= Net Finance Charge (e) -19,038

Funds From Operations [FFO] ( c) 202,823

+ Change in Working Capital [Fitch-Defined] 26,663

= Cash Flow from Operations [CFO] (n) 229,485

Capital Expenditures (m) -158,610

Multiple applied to Capitalised Leases 8.0

Gross Leverage

Total Adjusted Debt / Op. EBITDAR* [x] (a/j) 2.5

FFO Adjusted Gross Leverage [x] (a/(c-e+h-f)) 3.1

Total Adjusted Debt/(FFO - Net Finance Charge + Capitalised Leases - Pref. Div. Paid)

FFO Leverage [x] ((l+p)/(c-e+h-f)) 3.0

(Total Debt + Other Debt)/(FFO - Net Finance Charge - Pref. Div. Paid)

Total Debt W ith Equity Credit / Op. EBITDA* [x] (l/k) 2.4

CFO-Capex/Total Debt with Equity Credit (%) 10.8%

Net Leverage

Total Adjusted Net Debt / Op. EBITDAR* [x] (b/j) 1.4

FFO Adjusted Net Leverage [x] (b/(c-e+h-f)) 1.7

Total Adjusted Net Debt/(FFO - Net Finance Charge + Capitalised Leases - Pref. Div. Paid)

FFO Net Leverage [x] ((l+p-o)/(c-e+h-f)) 1.6

Total Adjusted Net Debt/(FFO - Net Finance Charge - Pref. Div. Paid)

Total Net Debt / (CFO - Capex) [x] ((l-o)/(n+m)) 4.9

CFO-Capex/Total Net Debt with Equity Credit (%) 20.5%

Coverage

Op. EBITDAR / (Interest Paid + Lease Expense)* [x] (j/-d+h) 9.0

Op. EBITDA / Interest Paid* [x] (k/(-d)) 10.9

FFO Fixed Charge Cover [x] ((c+e+h-f)/(-d+h-f)) 7.2

(FFO + Net Finance Charge + Capit. Leases - Pref. Div Paid) / (Gross Int. Paid + Capit. Leases - Pref. Div. Paid)

FFO Gross Interest Coverage [x] ((c+e-f)/(-d-f)) 8.7

(FFO + Net Finance Charge - Pref. Div Paid) / (Gross Int. Paid - Pref. Div. Paid)

* EBITDA/R after Dividends to Associates and M inorities

Source: Fitch Ratings, based on information from company reports.

Corporates




fitchratings.com 15

Fitch Adjustment Reconciliation


Fitch Financial Adjustments – Summary Financials


(THB Millions, As reported)

Reported

Values

Sum of Fitch

Adjustments

Cash

Adjustment

Preferred

Dividends,

Associates and

Minorities Cash

Adjustments

Lease

Adjustment

CORP - Lease

Treatment

Other

Adjustment

Adjusted

Values

31 Dec 19

Income Statement Summary

Revenue 2,219,739 0 2,219,739

Operating EBITDAR 294,935 4,234 5,978 -1,744 299,170

Operating EBITDAR after Associates and Minorit ies 294,935 -12,350 -16,584 5,978 -1,744 282,585

Operating Lease Expense 0 5,978 5,978 5,978

Operating EBITDA 294,935 -1,744 -1,744 293,191

Operating EBITDA after Associates and Minorit ies 294,935 -18,328 -16,584 -1,744 276,607

Operating EBIT 161,731 -1,744 -1,744 159,987

Debt & Cash Summary

Total Debt With Equity Credit 658,969 (3,052) -9,070 6,018 655,917

Total Adjusted Debt With Equity Credit 658,969 44,775 47,827 -9,070 6,018 703,743

Lease-Equivalent Debt 0 47,827 47,827 47,827

Other Off-Balance Sheet Debt 0 0 0

Readily Available Cash & Equivalents 292,542 17,365 17,365 309,907

Not Readily Available Cash & Equivalents 0 0 0

Cash-Flow Summary

Preferred Dividends (Paid) 0 0 0

Interest Received 0 6,425 6,425 6,425

Interest (Paid) -27,971 2,509 2,509 -25,462

Funds From Operations [FFO] 238,444 -35,622 -16,584 -19,038 202,823

Change in Working Capital [Fitch-Defined] 26,663 0 26,663

Cash Flow from Operations [CFO] 265,107 -35,622 -16,584 -19,038 229,485

Non-Operating/Non-Recurring Cash Flow 0 0 0

Capital (Expenditures) -158,610 0 -158,610

Common Dividends (Paid) -81,351 21,372 21,372 -59,979

Free Cash Flow [FCF] 25,146 -14,250 -16,584 2,334 10,896

Gross Leverage

Total Adjusted Debt / Op. EBITDAR* [x] 2.2 2.5

FFO Adjusted Leverage [x] 2.5 3.1

FFO Leverage [x] 2.5 3.0

Total Debt With Equity Credit / Op. EBITDA* [x] 2.2 2.4

CFO-Capex/Total Debt with Equity Credit (%) 16.2% 10.8%

Net Leverage

Total Adjusted Net Debt / Op. EBITDAR* [x] 1.2 1.4

FFO Adjusted Net Leverage [x] 1.4 1.7

FFO Net Leverage [x] 1.4 1.6

Total Net Debt / (CFO - Capex) [x] 3.4 4.9

CFO-Capex/Total Net Debt with Equity Credit (%) 29.1% 20.5%

Coverage

Op. EBITDAR / (Interest Paid + Lease Expense)* [x] 10.5 9.0

Corporates




fitchratings.com 16


Fitch Financial Adjustments – Debt Summary


(THB Millions, As reported)

Reported

Values

Sum of Fitch

Adjustments

Lease

Adjustment

CORP - Lease

Treatment

Other

Adjustment

Adjusted

Values

31 Dec 19

Debt Structure Details

+ Capital Leases 9,070 -9,070 -9,070 0

+ Total Secured Debt 9,070 -9,070 -9,070 0

+ Senior Unsecured Term Loans 231,580 0 231,580

+ Senior Unsecured Notes 418,319 0 418,319

+ Total Unsecured Debt 649,899 0 649,899

Senior Subordinated Debt 0 6,018 6,018 6,018

+ Total Subordinated Debt 0 6,018 6,018 6,018

Total Debt W ith Equity Credit 658,969 -3,052 -9,070 6,018 655,917

Lease-Equivalent Debt 0 47,827 47,827 47,827

Total Adjusted Debt W ith Equity Credit 658,969 44,775 47,827 -9,070 6,018 703,743

Source: Fitch Ratings based on company reports

Corporates




fitchratings.com 17

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