SMPC looks far and wide for overseas cylinder site

SET-listed Sahamitr Pressure Container Plc (SMPC), Thailand’s largest manufacturer of liquefied petroleum gas (LPG) cylinders, is looking for a second production site overseas.

Surasak Urpsiri, managing director, said the company plans to invest in a new facility with a capacity of 1.2-2.5 million cylinders a year in order to trim transport costs from Thailand.

Capital spending is set in a range of 300400 million baht, but final investment and the location have yet to be decided on.

“Our main markets are Southeast Asia and South Africa, where we are feeding the LPG cylinders to our international traders,” Mr Surasak said. “Our customers are both global oil and gas firms and small business operators.”

He said the company will expand capacity at the first site in Bangkok as well, since the utilisation rate is more than 95% this year.

The expansion for the Bangkok site is set to be 10 million cylinders, up from 8.2 million LPG cylinders a year, expected to be concluded by the end of this year.

“But the 10-million-cylinder capacity may not be enough to cover demand, as SMPC projects that the utilisation rate will remain high, at 97% in 2019 and above 105% in 2020,” Mr Surasak said.

Furthermore, he said the company plans to tap greater demand for LPG in new emerging markets such as western Africa, South America and South Asia, where environmentally friendly energy is seeing greater interest.

In the first stage, SMPC will spend roughly 100-150 million baht annually to increase procurement capacity of new machinery and waste management systems at the plant in Bangkok’s Bang Khunthian district.

Cited from a report of the LPG World Forum 2017, 2.8 billion people still do not have access to LPG, also known as a cooking gas, and these people use charcoal in their households.

“There is great potential to distribute and trade LPG in those countries,” Mr Surasak said. “We are looking for a business opportunity to invest in the LPGcylinder warehouse in western Africa in order to have a better delivery time and cut logistics costs, because it will take roughly 45-60 days to transport the LPG cylinders from Bangkok.”

Moreover, Mr Surasak said the main competitors who have production facilities in Turkey and India are closer to those markets than SMPC.

Last year, the company tested its market presence in Algeria, Ivory Coast and Ghana, as well as made the first shipments to Peru and Venezuela with 50,000 LPG cylinders.

In a related development, SMPC reported that revenue in the first half rose by 20% to 2.47 billion baht from 2 billion baht in the same period last year.

Revenue from overseas countries made up 95%, while the remainder is from SMPC’s local market.

Mr Surasak expects sales volume of LPG cylinders to total 8 million units in 2018, compared with 6.9 million in 2017.

SMPC is optimistic that it will sell 9.2 million cylinders in 2019.

SMPC shares closed yesterday on the Stock Exchange of Thailand at 13.40 baht, up 50 satang, in trade worth 15 million baht.