PTT may put off Bt360-bn capex plan

PTT might postpone some projects as part of the review next month of its five-year capital-expenditure plan in response to signs of an economic slowdown in China, less liquidity in global markets, and the United States tapering off its economic stimulus measures in the near future. 

Surong Bulakul, chief financial officer, said yesterday that based on PTT’s first-half operating results, investment plans would be revised accordingly to match the changes in the operating environment both here and abroad.

China is a large market and a vital trading partner, so any slowdown in its economy should have some adverse impact that must be considered. The planned Bt360-billion capex plan will likely not be downsized, just some projects delayed if necessary.

PTT will focus on stability at a reasonable level of investment, or “fit and firm”, so that it will be in a healthy position to participate in other upstream projects in North America with good prospects.

The liquidity crunch in the global market may make securing of overseas funding a bit harder, but PTT has already raised US$1.1 billion (Bt34 billion) via a debentures issue and still has more than $300 million available in a credit line with a Japanese bank, which should ensure sufficient liquidity. 

Trinity Securities expect PTT’s operations outlook last quarter to be relatively weaker than the first quarter, on projection of lower profit contribution from the group’s units, especially PTT Global Chemical and Thai Oil. The second-quarter net profit of PTTGC and Thai Oil will fall by about 50 per cent quarter on quarter because of a loss related to crude-oil inventory and a 30-day refinery shutdown for repairs and maintenance and the weakening of income from diesel and petrol refining.

PTT plans to reduce the production capacity of its natural-gas separation plants No 1 and No 6, which will reduce output. In any case, PTT expects to earn Bt115 billion this year.

A study shows the impact of the adjustment to the price of liquefied petroleum gas, such as the adjustment for households, on PTT can be segregated into three scenarios – postpone the LPG price adjustment until next year, hike the LPG price on par with the price for the transport industry, or raise the LPG price on par with the prevailing market price. 

Any of these three scenarios would raise earnings per share to between Bt0-Bt0.74 and Bt2.54-Bt4.54.