Performance Summary

Performance Result Q3/2018
The consolidated financial statement recorded revenue from sale of goods and rendering of services of Baht 53,461 million and Net Profit of Baht 2,216 million which was the Net Profit attributable to owners of the Company of Baht 1,856 million, or earning per share of 1.35 Baht.

Total EBITDA (4,160 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

On the 13th of November, 2018, Bangchak Corporation PCL held a press conference in regards to its performance and an overview of the past 9 months of 2018, and the company’s plan for the following 4 years; as well as the BCP group’s various investment plans.
Q: The BCP group’s EBITDA structure, both currently and in the following 4 years (2019-2022), what proportion will each business unit occupy?

A: With the past 9 months of 2017, BCP’s EBITDA recorded at THB 10,518 million, there were 2 business units with performance that exceeded target which are the Refinery Business Group with a recorded EBITDA of THB 5,349 million and the Power Plant Business which recorded EBITDA of THB 2,999 million. As for the target in the coming 4 years (2022), the company plans to double its 2018 EBITDA or to more than THB 30,000 million. The EBITDA structure originally had the Refinery Business occupying half of the total EBITDA of the entire BCP company group, Refinery Business might contribute to a quarter of the total EBITDA, the Marketing Business Group would contribute to 12%, the Power Plant Business 17%, the Bio-based Product Business 9%, and the rest will be from the Natural Resource Business. As for the company’s investment budget, it has been approximated at THB 77,000 million for the following 4 years of operations.



Q: Can you give us an overview of each business unit in the BCP business group?

A: Refinery and Trading Business Group has quite clearly grown over the past 4 years. This current year, say the refinery undergoing turnaround maintenance, if the days during TAM were to be deducted and counting just the days where normal operation commence, it can be seen that the refinery utilization rate was close to maximum capacity. Presently, the BCP refinery has a maximum of 120,000 barrels per day, however, if it were to actually run as a complex refinery, the yield would be about 110,000 barrels per day, the other 10,000 barrels is a yield of the simple refinery run. Within the next 4 years, BCP will complete its debottlenecking modification, enabling the refinery to produce up to 135,000 barrels per day; at the same time improvements will be made to crude oil management and refinery efficiency. As for target EBITDA, it will grow 1.5 times, mainly from the oil trade business through BCPT which is situated in Singapore.


Marketing Business Group saw its throughput per station market share increase from 2012’s 13.8% to 15.8% in the first 8 months of 2018. As for the next 4 years, hopefully, market share will increase to 18%, incidentally EBITDA target will increase by two folds, but the thing that BCP gives utmost importance to is Net Promoter Score, which in the next 4 years BCP has set its goal to achieve the highest NPS among its competition. The company does not have to strive for the highest market share, however, it must attain the highest customer satisfaction.


Power Plant Business Group under the management of BCPG PCL, a listed company in the Stock Exchange of Thailand. I would like to briefly address the company as follow, BCPG aims to grow from 380 MW to 1,000 MW, and double its EBITDA, while still focusing on portfolio management and green energy business.


Bio Based Product Business Group in 2014 had only 1 Biofuel production plant, and approximately 20% stake in the Ubol Bioethanol Co., Ltd. which had a combine production of 760,000 liters per day. Currently, the combined production capacity is 1,830,000 liters per day, the growth is quite evident, aside from the expanding production capacity of the Biodiesel plant at BBF, BCP also bought the Ethanol plant, BBE at Chachoengsao, and BCP also underwent an amalgamation with KSL, who is a producer of Ethanol, which this amalgamation makes us as the largest producer of Bio-Based product in the country, and has plan to get listed in the SET by next year. As for the company’s target for the next 4 years, a production expansion will take place which will see production rate increase to 2,200,000 liters per day and see its EBITDA increase 5 times, however the most important thing is the development of high value Bio-Based product, and researches into Bioplastic and Bioeconomy. For example, bagasse or wood chip is commonly believed to be used as fuel to generate power with high energy output, but, in reality, these processes still have room for more significant increases in value, during the last process, the wood chip can be turned into sugar, which can be turned into an assortment of things. Along with the aforementioned, a Bio-Hub will be established in the EEC special economic zone. BCP intends to develop the Bio-based business and may dabble into Lithium ion battery production due to BCP having active investments in a lithium mine in Argentina, which will produce yield by 2020 and will annually produce 2,000 to 3,000 tons of lithium per year, which can be used to produce car batteries for 62,500 cars with today’s technology, however in the next 3 to 4 years, the same amount can be used to produce more car batteries.



Natural Resources Business Group around 3 to 4 years ago, BCP invested in the E&P business of NIDO company, which is an upstream business, BCP's timing did not prove to be beneficial, oil price went through a slump, leaving NIDO as a cause for concern for investors and analysts through the various question they have imposed. As of today, BCP has sold the Galoc field attributed to NIDO, at the same time BCP believes that the current decline of oil price is a matter of business cycles. These days, the price of oil have started to increase, and BCP has made a large upstream investment in Norway, which should have been approved by the Norwegian government as of right now. BCP estimates that it will be the majority shareholder of OKEA by this December, and if everything goes according to plan in the next 4 years, the EBITDA of this business will grow 10 times.


Q: Please talk about the development of BIIC that has been established, what kind of investment is it focusing on? How much is the investment budget?

A: BCP has determined its investment budget at $50 million to invest in future business, our view is that the company’s core business is in Energy and Mobility, which will take up 60% of total investment, while the other 30% will be spent on Peripheral, and the other 10% have not been decided upon, but it is believed to be something new that would disrupt the status quo such as Blockchain or AI. At the same time, we will delve into research work, not solely relying on investments. From the investment money, we believe that 2 of the emerged business will become our core business, and in the next 4 years, the company should have 2 intellectual patents. From the above, it will put us stay ahead of the curve which means that we will stay in front of coming wave. This action will allow us to discern market trends and we can hold up and wait for.



Q: Does BCP have a plan in place on how to sustainably develop businesses?

A: We focus on 3 main things, the first is Climate change, from our world class advisor, BCP has 40% of its revenue from green energy and 60% from fossil energy; making it a company with high green energy ratio, whereas other companies would have green energy as 5 to 10% of their revenue. Our intention for the future is to sustain a higher ratio of green energy to fossil energy.


Next is the Bioeconomy and Circular economy, which will not only be answer to Climate change, but it will be the solution to decomposing mounds of garbage, plastic bags, which is the main problem of current times. BBGI will act as head for development and operating businesses in that area.


Last, but not least, it is the very essence of BCP, CSRs, BCP has gone into partnership with the Mae Fah Luang Foundation on the Pid Tong Lung Phra at Kaeng Magrood, we have brought Winter fruits to be sold in SPAR, asked the people to grow sugar cane and we are selling sugar cane juice in SPAR. BCP also looks after the community around the refinery, as well as pushing for various Biodiesel products such as B10 and B20.


Mr. Chaiwat Kovavisarach

President and Chief Executive Officer Director

Oil Market Outlook

OPEC & non-OPEC try to increase production to compensate Iran rapidly supply outage due to US sanction.
Crude Oil Price Outlook: Upside crude price until year-end as market deficit and likely to decline in next year after supply looming and weaker demand.

Focus on Q4’18:

  • Huge Iran production drop after US official sanction
  • Stable US oil rig due to Permian pipeline constraint
  • Global OECD stock below 5 year average level
  • Peak seasonal winter demand
  • OPEC try to increase production 1 MBD since 1 Jul’18 for compensate Venezuela & Iran supply outage

Market Highlights in 2019:

  • Supply disruption in Venezuela & Iran (U.S. sanction)
  • Strong dollar index effect emerging countries demand
  • US oil supply rising after debottleneck pipeline facility at Permian basin
  • Weaker demand in China due to trade war with US
  • IMF cuts world economic growth forecasts in 2019 from 3.9% to 3.7% due to US & China trade war
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 Q4’18:

  • Higher oil product export from China after announcing last new export quota
  • Most oil refineries come back from turnaround
  • Gasoline crack will be pressured by weaken demand during winter in Atlantic Basin and North Asia.
  • Strong gasoil crack will be supported from winter demand and refineries outage but should be pressured by China’s higher export quota.
  • Higher fuel oil arbitrage from West to Asia and OPEC’s heavy crude export fuel will ease fuel oil crack.

Market Highlights in 2019:

  • The next year to continue to be strong for middle distillates on the back of healthy demand growth and with additional marine gas oil volumes likely to head into the bunker pool come 2020.
  • The supply of fuel oil in the world continued to fall over 2019 on the back of continued refinery modernization
  • Demand growth for gasoline in China and India will, however, outstrip supplies from their new refineries.

IR Activities

29 Aug 2018

Opportunity day 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 investors at at Stock Exchange of Thailand on August 8, 2018

30 Aug 2018

Thailand Focus 2018

Bangchak Corporation Plc. by Mr. Chaiwat Kovavisarach, President and Mr. Surachai Kositsareewong, Senior Executive Vice President, Accounting and Finance joined Thailand Focus 2018 event hosted by Stock Exchange of Thailand to meet and update BCP information to insititutional investors at Grand Hyatt Erawan Bangkok, Thailand on August 30, 2018

7 Sep 2018

Goldman Sachs Commodities Conference in Shenzhen

Bangchak Corporation Plc. by Mr. Surachai Kositsareewong, Senior Executive Vice President, Accounting and Finance joined Goldman Sachs Commodities Conference event hosted by Goldman Sachs Securities to meet and update BCP information to international insititutional investors at Grand Hyatt Erawan Shenzhen, China on September 7, 2018

25 Oct 2018

ESG Focused Portfolio Event

Bangchak Corporation Plc. by Mr. Chaiwat Kovavisarach, President and Mr. Surachai Kositsareewong, Senior Executive Vice President, Accounting and Finance joined ESG Focused Portfolio Event hosted by Government Pension Fund to interview about promoting ESG in company at Ma Maison restaurant in Bangkok on October 25, 2018

31 Oct 2018

SET Sustainability Awards 2018

Bangchak Corporation Plc. by Mr. Chaiwat Kovavisarach, President and Mr. Surachai Kositsareewong, Senior Executive Vice President Accounting and Finance joined SET Sustainability Awards 2018 at Stock Exchange of Thailand Building on October 31, 2018. Bangchak Corporation Plc got 2 awards which were Best Sustainability Awards 2018 and Thailand Sustainability Investment (THSI)

13 Nov 2018

Analyst meeting Q3/2018

Bangchak Corporation Plc. by Mr. Chaiwat Kovavisarach, President and Mr. Surachai Kositsareewong, Senior Executive Vice President, Accounting and Finance had announced the company’s Q3/2018 performance to analysts and investment communities at Bangchak Corporation HQ, M Tower Building on November 13, 2018

14 Nov 2018

Opportunity day Q3/2018

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 Q3/2018 performance to investors at at Stock Exchange of Thailand on November 14, 2018

15-18 Nov 2018

SET in the City 2018

Bangchak Corporation Plc. by Mr. Surachai Kositsareewong, Senior Executive Vice President, Accounting and Finance had joined Set in the City event hosted by SET to meet and update BCP performance to investment communities at Royal Paragon Hall Bangkok on November 15-18, 2018

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