Thailand: Bangchak touts growth path under diversification

Thailand: Bangchak touts growth path under diversification

BANGCHAK Petroleum is planning for 20 per cent growth annually in the next
two years for its earnings before interest, tax, depreciation and
amortisation (EBITDA), chief executive Chaiwat Kovavisarach said.

The company would also strengthen its resources and bio-products units under
plans to bolster their status as the "fourth and fifth pillars" of the
business.

Reflecting its diversification beyond the oil and gas industry, the company
will ask its shareholders at the annual meeting on April 5 to approve a name
change to Bangchak Corporation.

Chaiwat, who is also the company's president, said Bangchak had succeeded in
solidifying its three core businesses: refinery, marketing and electricity.
Now, he said, it was time for Bangchak to move ahead with a plan to build up
the resources and bio-products businesses and make them significant
contributors to the group's income within two years.

The group could list the two operations on the stock market, depending on
capital requirements, and thus realise the true value of the businesses, he
said.

Chaiwat said he was satisfied with all aspects of Bangchak's businesses that
he had overseen in the two years since taking the helm of the company. One
exception, he said, concerned the valuation of the company by the stock
market. Bangchak shares are being traded on the Stock Exchange of Thailand
at just about 9 times its earnings.

In comparison, BCPG, its spun-off power subsidiary, has gained a |better
realisation in market value, being traded at over 16 times its earning.

Chaiwat said each of the resources and bio-products business groups should
generate EBITDA of at least Bt1 billion annually by 2019, up from about
Bt300 million and Bt400 million to Bt500 million, respectively, at present.
Bangchak reported consolidated EBITDA of Bt18 billion last year.

The bio business could show major development this year with several
high-value-added products in the development pipeline. One of them is
phase-change material, which is the subject of discussions for a
joint-venture plan with potential Japanese partners, Chaiwat said.

Bangchak is also looking to expand the production capacity of its bio-fuel
business, through organic means and mergers and acquisitions. Current output
is not sufficient for its internal requirements. Bangchak uses 800,000 to
900,000 litres of ethanol a day; its current capacity is only 200,000 to
300,000 litres.

The resources group includes its petroleum and exploration and lithium-ion
mining businesses.

On the rebranding plan, Chaiwat said the planned deletion of "Petroleum"
from the company's name would reflect its business direction to "rebalance"
its operations toward more sources of incomes beyond fossil fuels. Unlike 30
years ago, "petroluem" nowadays is not such an alluring name, he said.

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com