Bangchak expects BPCG to emulate parent’s market cap

Bangchak’s market capitalisation currently stands at about Bt47 billion.

BPCG’s filing process is expected to be completed in February, and the initial public offering (IPO) will be launched the following month, should market conditions be suitable, said Chaiwat Kovavisarach, Bangchak’s president.

Bangchak has just finished the restructuring of BPCG in order to put all renewable-power businesses in the group under the one umbrella.

BPCG will engage only in renewable-energy business and will not venture into conventional power, he said.

Bangchak will reduce its shareholding in BPCG from 100 per cent to no less than 70 per cent after the IPO.

Kasikornbank, Tisco Securities and Finansa Securities are financial advisers for the IPO plan.

BPCG currently has a generating capacity of 118 megawatts and assets of Bt10 billion.

Chaiwat said the group was currently negotiating a deal to acquire a portfolio of 200MW-300MW of solar-farm assets, which would add to the generating capacity of BPCG. 

“We could know the results today,” he said yesterday.

Bangchak stock is still being traded at a discount to its actual value, considering the fact that its operations also include renewable power and retail businesses, as investors would usually give a higher price-to-earnings ratio to stocks operating in these kinds of business, he said.

A spin-off of BPCG’s listing, therefore, will be to help the group to realise a better valuation, he added.

Bangchak targets earnings before interest, tax, depreciation and amortisation (ebitda) of Bt12.6 billion next year, down from the Bt16 billion expected for this year.

However, this year’s ebitda will be 60 per cent higher than the Bt10.4-billion target set at the beginning of the year, when Chaiwat became president. 

“These figures are operating ebitda, which does not include oil inventory losses. Nevertheless, even with the inventory losses, we would still significantly beat our target,” he explained.

Bangchak’s gross refining margin is expected to stay at a relatively high level of about US$7 (Bt252) a barrel next year, compared to $8-$9 at present and the average for this year, thanks to low oil prices, which have encouraged more consumption.

The gaps between the price of crude oil and the prices of finished oil products have widened –especially for gasoline products, where a supply shortage is looming across the Asia-Pacific – with the spreads having doubled from recent record levels, said the company president.

The group will invest more than Bt10 billion next year, Bt3 billion of which will be for gearing up its oil marketing business, Bt2 billion for oil refining, and the rest for new businesses, including renewable power and biofuels.

Bangchak plans to open another 60 oil retailing stations next year, nearly double this year’s 38 new outlets. It will also convert one-third of its small cooperative oil stations into standard-sized service stations, and will continue expanding its non-oil business at the outlets, Chaiwat said.

“We will make an announcement [about this] early next year. It should be something very exciting for the market,” he added.

 

On the acquisition trail 

The president said Bangchak was currently in “intensive discussions” over acquiring a small petroleum exploration and production (E&P) asset, which could be concluded in February or March.

He said the group was better off by not having sealed an E&P deal this year, considering the sharp fall in global oil prices from more than $70 a barrel early this year to just over $30 now.

The company forecasts oil prices moving in a wide range of between $30 and $58 a barrel next year.