BCP IR Newsletter

FY2017


Bangchak Corporation PLC. set corporate culture goals to develop businesses side by side with the environment and society for corporate sustainability. Run CSR/CSV businesses complementary to business growth and extend from them. This social enterprise is aimed at creating jobs, generating income, and promoting community members’ joint stewardship of their habitats.

Performance Summary

Performance Result 2017
The consolidated financial statement recorded revenue from sale of goods and rendering of services of Baht 172,138 million and Net Gain of Baht 6,405 million which was the Net Profit attributable to owners of the Company of Baht 5,778 million, or earning per share of 4.20 Baht.

Total EBITDA (13,663 MB.)

Unit: THB Million

Key Financial

Business Unit 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

On the 1st of February, 2018 the Bangchak Corporation PCL held a press conference on an overview of 2017 and 2018, along with investment plans at Bangchak Head Office
Q: Can you give us an overview of BCP's performance in the previous year (2017)?

A: As for the Refinery Business, it was utilized at high levels throughout the year, especially in March where BCP managed an average of 121.6 KBD, a new record for the Refinery Business. As for the Cogeneration Power Plant which completed its construction, it contributed to the reduction of infrastructure cost and firmly cemented electrical current stability as a Self-sufficient Power Generation unit, and reduced pollution emission; it uses Natural Gas as fuel for producing electricity.


The Marketing Business’s 2017 shares was at 15.4%, Net Promoter Score for BCP service station continued to increase from 2015. The 2017 score was close to the market leader, while throughput per station, for standard size service station, not including Co-Op stations, is higher than the industry’s average.


BCPG’s Power Plant Business, in which BCP holds 70% shares, the decision to list BCPG in to SET is an act of Value Creation for BCP. The initial investment BCP made was approximately in the range of ten billion THB. Currently, BCPG market value is approximately fifty billion THB at its market price of 25.75 THB per share.


The Bio-Based Product Business in the previous year saw BCP’s subsidiary, BBH amalgamated with KSLGI, which itself a subsidiary of the Khon Kaen Sugar Industry PCL, to establish BBGI on the 31st of October, 2017, to become one of the largest domestic producer of Bio-based products, Bio-based business has production of Biodiesel around 800 to 900 KLD, and produces 800 KLD of Ethanol from both Molasses and Cassava; the product having been produce from the two aforementioned raw material has alleviated pressure from production cost risk management.


The Natural Resources Business saw BCP furthering investing in the Lithium Business increasing held shares to 16.1%. As the moment, the Cauchari-Olaroz project in Argentina is in the process of designing the method of excavation to extract brine, which according to plan will be completed in early 2020. As for the Exploration and Production Business moved headquarters to Bangkok.


BCP established the Bangchak Initiative and Innovation Center (BIIC) meant to carry out research and development, it was officially unveiled in September 2017.



Q: Can you tell us about social and environmental awareness activities from the previous year?

A: BCP still continues to give precedents to CSR activities i.e. the company further improved upon the foundations laid by its dry rice complimentary gift promotion by changing to brown rice and value adding processes. In May 2017, the company established the Bai Mai Pun Sook Institute in the pursuit of environmental relief and improving the quality of life in communities, with various successive activities i.e. purchase of used vegetable oil, Thailand Go Green, and holding the 2017 International CSR Summit.



Q: What plans does BCP have for 2018?

A: The Refinery will undergo a Turnaround Maintenance (TAM), which will begin in late April continuing to middle of June, a total of 45 days, there is a two year interval between TAMs. As for increasing production of the CCR unit from the 3E program mandate, the contractor will begin construction within 2018, the plan estimates that construction will be completed by 2020. Implementation of Debottlenecking will commence the former has begun in 2018. Once all the construction wraps up, the refinery is expected to be able to produce 133 to 140 KBD, however production volume is subjected to market conditions


The Marketing Business will focus on the Green Eco-system with Digitalization. The Green Eco-system within service stations revolves around Green Products, and recently the company premiered its new lubricant engine oil product, “Furio”. The Greenovative Experience will rely on the application of Digitalization. As for business expansion into CLMV countries, the Inthanin Coffee Business has made its debut, as for service stations, BCP is exploring different opportunities and possibilities for expansion.


The Growth Engine and Platform will further and support BCPG and BBGI. BCP is intent on expanding its businesses and could possibly choose areas within the EEC; this new frontier connects the Northeast to the East of Thailand, while connecting to Thailand’s border countries; Cambodia and Laos PDR., with emphasis on Bio-based product.


Another crucial point that we give importance to is our personnel, which can be divided in to the following: 1. People, BCP would manage courses and develop human capital, with contributions from HR’s applied Digitalization, 2. Process, adjustments are made to methods and processes for various functions to increase efficiency, and 3. Technological support for IT innovations.


Finally, it is the community and the environment. BCP has endorsed products from various communities by putting them on retail shelves at SPARs, these goods have also been exported through SPAR’s network as well.


Q: What are BCP’s targets for sustainability?

A: The refinery aims to have its Energy Intensity Index below 90 and lower water usage, while possibly within the following 10 years that BCP would become a Carbon Neutral Company. The Marketing Business intends to establish standards for Green Service Stations’ Green Eco-system to be environmentally friendly, culminating as a leader in renewable energies. As for the social aspect, BCP has found jobs for people with handicaps at BCP, accepting them as permanent employees, with a goal of 1% of overall personnel roster. As for community work, it is not merely just about distribution of funds, BCP aims to improve the quality of life for people in the communities, i.e. helping improve literacy and providing opportunities for higher education to those in need.



Q: How has BCP set up its investments for the future, along with performance goals?

BCP and its subsidiaries has set an investment budget for the proceeding 5 years from 2018 to 2022 at THB 113,000 million, this amount encompasses investments in BCPG and BBGI, the two companies’ investments amount to 33% and 18% of total investments, respectively. While BCP will have half of the funds invested to it, attributing 20% to the refinery, 11% to marketing, and the remaining 18% will be distributed according to the chart below.


Performance growth will see increase in average cumulative growth per annum to 14% between 2016 and 2022. As can be seen in 2016’s EBITDA that the refinery contributed to half of the total sum, however in 2022 will lower to one third of the total with contributions from other businesses increasing and seeing profit coming in from various different sources.



Mr. Chaiwat Kovavisarach

President and Chief Executive Officer

Oil Market Outlook

High compliance rate and strong demand to support stock drawdown
Crude Oil Price Outlook: Tighter crude stock surplus support prices, eyed on OPEC exit cut deal strategy

Focus on Q1’18:

  • Bomb cyclone in US support heating demand and refinery run.
  • High OPEC supply cut compliance.
  • Supply disruption in Venezuela and Libya
  • High refinery maintenance in late of winter
  • U.S. oil supply continue to grow

Market Highlights in 2018:

  • Global demand growth due to strong economics.
  • Oil production cuts bed by OPEC and Russia tighten oil market.
  • Non-OPEC supply growth, lead by U.S. , Canada & Brazil
  • OPEC review cut deal in Jun’18 (beginning of OPEC exit cut?)
Healthy middle distillate crack spread in Q1, supported by winter demand and heavy refinery maintenance in Middle East

Focus on Q1’18:

  • Higher oil products export from China after refiners receive higher export quota for the first round of 2018.
  • Upcoming refinery turnaround support cracks
  • Gasoline cracks pressured by weaken demand in winter in Atlantic Basin.
  • Middle distillates perform well through the cold in Northeast of Asia.
  • Fuel oil continued its recent dive as supply overbears sluggish demand.

Market Highlights in 2018:

  • The incremental demand growth in Asia will offset supply increase from the recently commissioned refinery projects.
  • Continuation of relative light end support compared to middle distillates on still strong demand.
  • Demand growth in Asia should support the overall gasoline market.
  • Slower Asia’s gasoil demand growth and higher supply
  • Further fuel oil tightness expected

IR Activities

25-28 Nov 2017

Site visit "Guangzhou" Spar Store, Guangdong

Bangchak Corporation Public Company Limited by Mr. Surachai Kositsareewong, Senior Executive Vice President, Accounting and Finance had joined site visit event to visit "Guangzhou" Spar store with analysts in Guangdong, China on November 25 - 28, 2017

11-12 Jan 2018

Credit Suisse: ASEAN Conference 2018

Bangchak Corporation Public Company Limited by Mr. Surachai Kositsareewong, Senior Executive Vice President, Accounting and Finance had joined ASEAN conference 2018 event hosted by Credit Suisse to meet and update BCP information to international insititutional in Singapore on January 11 - 12, 2017

25 Jan 2018

Thailand Conference

Bangchak Corporation Public Company Limited by Mr. Surachai Kositsareewong, Senior Executive Vice President, Accounting and Finance had joined Thailand conference 2018 event hosted by J.P. Morgan Asset Management to meet and update BCP information to international insititutional in Singapore on January 25, 2017

4-5 Feb 2018

Thailand Corporate Day

Bangchak Corporation Public Company Limited by Mr. Surachai Kositsareewong, Senior Executive Vice President, Accounting and Finance had joined Thailand Corporate Day event hosted by Maybank Kim Eng to meet and update BCP information to international insititutional in Malaysia on February 4 - 5, 2017

5 Mar 2018

Analyst Meeting (2017 Performance Result)

Bangchak Corporation Plc. by Mr. Chaiwat Kovavisarach, President and Mr. Surachai Kositsareewong, Senior Executive Vice President, Accounting and Finance has announced the company’s 2017 performance to analysts and investment communities at Bangchak Corporation HQ, M Tower Building on March 5, 2018