Performance Summary

Performance Result Q2/2018
The consolidated financial statement recorded revenue from sale of goods and rendering of services of Baht 45,558 million and Net Gain of Baht 1,157 million which was the Net Profit attributable to owners of the Company of Baht 1,007 million, or earning per share of 0.73 Baht.

Total EBITDA (3,366 MB.)

Unit: THB Million

Key Financial

Business Performance

Bangchak boasts a complex refinery with a capacity of 120,000 barrel per day based on sophisticated hydrocracking technology. The Company took assorted measures to raise its outputs and manage its refining margins.

Stock Snapshot

Bangchak Corporation Public Company Limited

is a Thailand based company engaged in the operation of oil refinery and marketing the finished products through its service stations. The Company’s oil market includes consumers in various sectors, such as transportation, aviation, shipping, construction, industrial and agriculture. Other businesses are renewables and Exploration & Production.


Fundamentals

Executive Talk

BCP returns to upstream investing, buys crude oil field in the North Sea
Mr. Chaiwat Kovavisarach, the President and Chief Executive Officer of the Banchak Corporation PLC did a special interview in the Prachachart Business newspaper issue dated 30th of July to 1st of August, 2018.
Q: Why did you reinvest in the upstream business again?

A: This investment in the upstream business was meant to balance BCP’s business portfolio. As can be seen in the past 2 to 3 years, BCP has been focusing on green businesses, however, had the crude price in 2018 been at the 60 to 65 $/BBL level, BCP would not have gone into the upstream business because procurement would have already been relatively inexpensive, however, when crude price reached the 80 $/BBL level, and not being a one-time spike, but a price plateau that has lasted 3 to 4 months, and with everyone seeing price trend being on the rise, BCP would have to mitigate this price risk. The company has been carefully monitoring this business for some time before the decision was made.


Q: The supply source was bought from Shell.

A: The Draugen and Gjoa Field are huge crude oil reserves located in the North Sea, the sites’ underground reserves is estimated to contain about 1.4 million barrels. Whereas in Thailand, oil consumption does not approach 1 million barrels; the reserve has been in production since 1995. Its current production rate is 20,000 Barrels per day. BCP bought the reserves off from A/S Norske Shell through OKEA, a company which BCP has 45% stakes in or THB 3,760 million as investment. As for the reason that Shell sold off the reserves, it can be attributed to their merger with BG which wanted to shed $ 30,000 million worth of assets, thus was the reason for selling this site. Even though it being a world class asset, when compared to Shell’s investment production, 100,000 BBL is not an incredibly ambitious sum, but to BCP this level of crude production is immense, we will develop the oil reserves and continue to capitalize on the site well into 2050.


Q: The investment budget is pretty high.

A: When considering BCP’s energy business, our EBITDA is between THB 13,000 to 15,000 million after tax and interest, part of what is left goes on to pay dividends, the remaining money is used for asset development, refinery maintenance, service stations, and some of it is used to invest in BCP’s new business wherein we will be stepping away from our comfort zone by investing abroad. You will see that in the past 3 to 4 years, BCP has set aside $50 to $100 million, or THB 1,000 to 3,000 million to expand various businesses.


Q: Was this the reason why the Galoc field was sold?

A: Nido Produciton production source (Galoc) in the Philippines was a micro operation with a few years of production left in it. It is natural that BCP would start to see problems with production and complications. Incidentally, there was a company that specialized in drilling, the Tamarind (Galoc) who wanted this particular site, so they took the site of our hands in the amount of THB 660 million because their assessment came to a conclusion that there are sites within its vicinity that can still be explored.


Q: Investments for the future?

A: Even though BCP has invested in upstream businesses, the company has not forgotten about its green business. Recently, BCP was exploring investments in a startup in the United States that makes solid state batteries for electric vehicles, which major car manufacturers or even electronic giants from South Korea had invested in; the startup has the most advance technology. The reason this startup was discovered was due to the scout team that was sent to Silicon Valley every 3 months, residing there for 1 month, to discuss various technologies that stands to impact BCP. BCP do not invest a large sum in future businesses; about 1% or $10 million, but are able to secure technologies that can used to further BCP’s future business i.e. the Lithium battery business.


Q: Connections to the Lithium mine?

A: BCP have 2 Lithium mines in Argentina and another in Nevada, USA which is still going. The mine located in Nevada is the largest Lithium mine in the US, it produces an upward of 60,000 tons, it is currently undergoing EHIA. It is expected to begin operation in the following 2 to 3 years which will be used as the main component of the new battery by the startup; it is not a large investment, but will secure the future because initially $5 million was invested in the Lithium mine with an additional $32 million, currently, its market value is approximately $80 to 90 million. The next agenda is to increase HR capacity.


Q: Investments in the Power Plant business?

A: Bangchak has continued to invest through BCPG to a point where Solar Power Plants starts to become saturated, thus we are looking into other renewables like wind power, should the opportunity arise and the investment has potential, we would be increasing our investment. BCP’s local Solar Power Plant can produce 150 MW, another 150 MW comes from the Japanese location; currently we have completed construction on what amounts to 50 MW, we would have to continue to build, and we also have Wind Power Plant in the Philippines with 30 MW and a Geothermal Power Plant in Indonesia that can produce 200 MW. You can see that the Wind Power Plant’s output is relatively minuscule. Bangchak has just bought a 30 MW Wind Power Plant and also Shiotomo’s in Indonesia with 200 MW, and still has the capabilities to consider investing 10 MW further in Nakorn Srithammarat. As for provinces in Thailand that can sustain Wind Power Plants, they are Petchaboon and Nakorn Srithammarat that has wind channels.


Q: Retail marketing?

A: There has been constructions and renovations of service stations, new investments in non-oil, all of this contribute to BCP’s market share, this past May was the first time we have reach 16% market share (statistics reported by MOE) which we had gradually worked up from 14%. As for our service station target for this year, we plan to open 80 locations, throughout 2018 number of locations will be between 1,150 to 1,160 locations, most of them will be dealer stations, this serves to increase SME incomes, as for the SPAR convenience store, we should have 40 to 50 locations by the end of the year from the previous year’s 20 locations. As for the Inthanin Coffee shop, they have “Inthanin Garden” locations that are larger, we aim to increase 100 to 200 locations for a total of 500 locations, as well as BCP having lease the rights to the Inthanin franchise to Laos PDR and Cambodia. As for the Big C convenience stores in 160 BCP service stations is in the middle of negotiating a joint agreement between Big C and Spar.

Mr. Chaiwat Kovavisarach

President and Chief Executive Officer Director

Oil Market Outlook

Huge supply disruption in Venezuela & higher Iran output decline after sanction caused OPEC & non-OPEC announce to increase output in 2H’18
Crude Oil Price Outlook: More upside risk in oil price due to disruption in Venezuela & Iran even OPEC & non-OPEC will increase output to compensate

Focus on Q3’18:

  • Crude buying return after huge refinery turnaround
  • Higher Venezuela supply disruption & lower Iran crude export after sanction
  • Global OECD stock below 5 year average level
  • OPEC & non-OPEC announce to increase production 1 MBD since 1 Jul’18
  • U.S. oil supply continue to grow

Market Highlights in 2018:

  • Global economy supporting robust oil demand growth
  • OPEC strong compliance rate to cut oil output, lead to tighten oil market
  • Supply disruption in Venezuela & Iran (U.S. sanction)
  • Non-OPEC supply growth, lead by U.S. , Canada & Brazil
  • OPEC & Alliances raise production 1 MBD in 2H’18 to compensate Venezuela & Iran disruption
Soften middle distillate crack spread in Q3, weighted by refinery back from turnaround. While gasoline crack will return due to driving season demand

Focus on Q3’18:

  • Higher oil product export from China especially gasoil after announce new export quota
  • Most oil refineries come back from turnaround
  • Gasoline cracks was supported by summer driving season demand despite high stock in all regions
  • Gasoil crack was pressured by higher export quota by China & softening India demand in monsoon season
  • Fuel oil crack was supported by Middle East summer demand in utility sector

Market Highlights in 2018:

  • The incremental demand growth in Asia will offset supply increase from the recently commissioned refinery projects
  • High crude price effect light distillate crack due to higher consumer price elasticity of demand
  • Demand growth in Asia can’t support gasoline price due to high level of crude price
  • Slower Asia’s gasoil demand growth and higher supply
  • Fuel oil demand for power generation continue to decline especially in Middle East

IR Activities

15 May 2018

Analyst meeting Q1/2018

Bangchak Corporation Plc. by Mr. Somchai Tejavanija,Chief Marketing Officer & Senior Executive Vice President, Marketing Business Group, Mr. Surachai Kositsareewong, Senior Executive Vice President, Accounting and Finance, and Mr. Chalermchai Udomranu,Senior Executive Vice President, Refinery Business Unit had announced the company’s Q1/2018 performance to analysts and investment communities at Bangchak Corporation HQ, M Tower Building on May 15, 2018

17 May 2018

Opportunity day Q1/2018

Bangchak Corporation Plc. by Mr. Surachai Kositsareewong, Senior Executive Vice President, Accounting and Finance, Miss Kittima Wongsaen, Vice president, Corporate Strategy and Budget Planning, and Miss Supamol Aiem-On, Investor Relation manager had announced the company’s Q1/2018 performance to investors at at Stock Exchange of Thailand on May 17, 2018

8 Jun 2018

8th Asian Excellence Award 2018

Bangchak Corporation Plc. by Mr. Surachai Kositsareewong, Senior Executive Vice President Accounting and Finance joined 8th Asian Excellence Award 2018 at JW Marriott Hotel in Hongkong on June 8, 2018. Bangchak Corporation Plc got 3 awards which were Asia's Best CEO, Best Investor Relations Company, and Best Environmental Responsibility

28-29 Jun 2018

Shareholder site visit

The Bangchak Petroleum Plc. by Mr. Surachai Kositsareewong, Senior Executive Vice President Accounting and Finance, Mr. Kiatchai Maitriwong, Senior Executive Vice President, Corporate Strategic Planning and Sustainability Development Group,Mr. Pichit Wongrujiravanich, Executive Vice President, Internal Audit, Miss Kittima Wongsaen, Vice president, Corporate Strategy and Budget Planning, and Ms. Saowapap Sumeksri, Vice President Finance had welcome and update BCP information to investors on June 28-29, 2018

2 Jul 2018

Analyst Briefing

Bangchak Corporation Plc. by Mr. Chaiwat Kovavisarach, President and Mr. Surachai Kositsareewong, Senior Executive Vice President, Accounting and Finance had given information about investment in OKEA company to analysts at Bangchak Corporation HQ, M Tower Building on July 2, 2018

5 Jul 2018

DBS Conference (Oil & Gas)

Bangchak Corporation Plc. by Mr. Surachai Kositsareewong, Senior Executive Vice President Accounting and Finance joined DBS Conference (Oil & Gas) event hosted by DBS Vicker Securities to meet and update BCP information to international insititutional at DBS Head Office (DBS Tower3), Singapore on July 5,2018

13 Aug 2018

Thailand Corporate Day

Bangchak Corporation Plc. by Mr. Surachai Kositsareewong, Senior Executive Vice President Accounting and Finance joined Thailand corporate day event hosted by Maybank Kim Eng Securities to meet and update BCP information to international insititutional at JW Marriott hotel, Hongkong on August 13, 2018

15 Aug 2018

Analyst meeting Q2/2018

Bangchak Corporation Plc. by Mr. Chaiwat Kovavisarach, President and Mr. Surachai Kositsareewong, Senior Executive Vice President, Accounting and Finance had announced the company’s Q2/2018 performance to analysts and investment communities at Bangchak Corporation HQ, M Tower Building on August 15, 2018

Archive IR-Newsletter