Bangchak poised to seal next deal
BANGCHAK Petroleum Plc expects to conclude another major merger and acquisition deal before the end of next month, said its president Chaiwat Kovavisarach.
The acquisition would be part of Bangchak’s plan to spend Bt90 billion on growing its existing and new businesses via organic and merger and acquisition expansions from 2015 to 2020. The latest deal falls into the new business category, which includes green-power generation and petroleum exploration and production, although Chaiwat declined to provide more details.
“It [the deal] should be to the tune of billions of baht,” he said.
Bangchak’s green-power subsidiary BCPG Plc signed a conditional share-purchase agreement on January 29 to acquire SunEdison group’s all solar-power business in Japan for 9,626 million yen (Bt2.9 billion). SunEdison is slated to have a total installed capacity of 198 megawatt, comprising 13MW of installed solar farms, 27MW of under-construction projects, and 158MW of under-development projects.
Chaiwat said the SunEdison takeover was very reasonably priced since BCPG had paid only Bt1.27 billion so far and would pay the rest in accordance with the success of the under-development projects. He said that given the talent pool and engineering capability at SubEdison, BCPG had acquired a “platform” for growing its solar power business.
He said the solar farm business in Japan that the group acquired from SunEdison would reach a break-even point when it had a 60MW capacity, which it expected to achieve next year.
BCPG is expected to launch its initial public offering in September. It currently has a total contractual capacity of 129MW, comprising 118MW in Thailand and 11MW in Japan.
The company recently won 12MW of solar farm capacity from the Energy Regulatory Commission’s state agencies and farm cooperatives’ free-field installations programme.
Bangchak yesterday announced a first-quarter net profit of Bt47 million, down from the Bt1 billion posted a year ago. The fall was chiefly due to the 45-day maintenance shutdown of its oil refinery and an inventory loss of Bt1.34 billion. But the result beat the consensus estimate of a net loss of Bt165 million.
Chaiwat said Bangchak’s first-quarter results were satisfactory because excluding the inventory loss, it would book a consolidated earnings before interest, tax, depreciation, and amortisation of as much as Bt2.517 billion, even though it ran its refinery only 45 days out of 90 days in the first quarter.
“It is still in line with our target to book a total ebitda of Bt12 billion this year,” he said.
Bangchak booked an accounting ebitda of Bt10 billion in 2015.
Nevertheless, Chaiwat expects the company’s gross refinery margin to be at a mid single-digit level this year, down from nearly US$10 (Bt354) a barrel last year, as the oil market is returning to its demand-supply equilibrium.
Chaiwat said the company’s downstream oil business performed very well, with record sales volumes repeatedly made in the first three months.
The company is targeting the launch of 400 petrol stations over the next four to five years, increasing from 1,074 stations at present. About 50-60 new petrol stations are expected to be open this year.
From January to March, Bangchak booked a total ebitda of Bt1.19 billion, down 49 per cent year on year.
Among its five core businesses, only the oil refinery business reported an ebitda loss – Bt645 million, down 181 per cent year on year.
Its downstream oil business booked a positive ebitda of Bt1.04 billion (a 41 per cent increase); its power generation business booked Bt628 million (down 12 per cent); its biofuels business recorded Bt146 million (up 82 per cent); and its petroleum exploration and production business secured Bt22 million (down 22 per cent).
