The Bangchak Petroleum
Aim to become integrated power company BCP is investing in new projects, focusing on diversified powerrelated businesses in order to become an integrated power company and to reduce profit volatility and create strength in the long run. BUY
The Bangchak Petroleum Plc (BCP)
- Reduce profit volatility with business diversity
BCP's business strategy from now on is to focus on more diversified
businesses, still power-related though, to use a benefit from business
diversity to reduce profit fluctuation in the future. At present, 85% of BCP is
a refinery business and 15% is solar power business. The company has
recently expanded its investment to upstream businesses: petroleum
exploration and production through stake purchased from Nido Petroleum
Limited and ethanol production and distribution through BCP Bioethanol
Company Limited. However, we believe BCP would announce additional
business plans in 2H14.
- Solar power plant: powerhouse in 2H14
We preliminarily maintain FY2014 earnings forecast. 1H14 net profit made
up 70% of our FY2014 earnings forecast (B500m insurance claim not
included). However, 2H14 net profit is unpredictable as a result of
extraordinary items; we are currently waiting for the clarity in 2H14 before
revising FY2014 earnings forecast. Profit in 2H14 is projected to come
mainly from solar power business; production from all three phases would
be fully recognized. Meanwhile, profit from the refinery business would stay
flat from 1H14. Though the refinery has resumed working after a shutdown,
2H14 GRM is projected to weaken from 1H14, which was a high season.
- BUY. 5%p.a. dividend yield
We derive FY2014 fair value (DCF) at B36. BUY is reiterated; its profit is
expected to grow continuously and stably, and average dividend yield can
be expected at 5%p.a.
