Bangchak Corp allocates 50 billion baht in a push for diversification and lower costs, focused on renewables.
Budget aims to hike Ebitda 2.5 times
SET-listed Bangchak Corporation (BCP) has announced a five-year budget allocation of 50 billion baht to increase efficiency and diversify new business.
BCP operates five business units: oil refining, marketing, renewable energy, bio-based products and natural resources.
Chaiwat Kovavisarach, president and chief executive, said the budget aims to increase BCP’s earnings before interest, taxes, depreciation and amortisation (Ebitda) 2.5 times by 2024.
BCP posted Ebitda for the first nine months of 6 billion baht.
“Almost 70% of the budget will focus on renewable power, digital energy, energy storage and gas-to-power projects, while the remaining 30% will go to conventional businesses: oil trading, refining, oil retail, and petroleum exploration and production,” he said.
Mr Chaiwat said BCP plans to expand new investment and acquire existing businesses, as well as explore new business transformation.
For oil trade, BCP plans to increase the volume by nearly four times to 250 kilobarrels per day from 68 now.
“Oil trade normally requires a small investment, but BCP is confident it can achieve a larger volume in the coming years,” he said.
The company operates its oil trade business through wholly owned BCP Trading Co, a business unit for crude oil procurement and export surplus of its refined oil.
For retail, BCP plans to add 60 petrol stations in 2020 at a cost of 800 million baht. It operates roughly 2,000 stations in 2019.
BCP plans to maintain its No.2 share of the oil retail market at 16.5% in 2020 by expanding its non-oil business such as coffee shops and convenience stores.
For oil refining, the company plans to spend some 6 billion baht to improve its oil emission standards to meet Euro 5, up from the current standard of from Euro 4 now.
The Energy Ministry announced the Euro 5 standard will take effect in early 2024 for the country’s refineries.
BCP is increasing its average refinery capacity to 120 kilobarrels per day in 2020 from 112.5 in 2019, using a small budget.
“But the return can save expenses of at least 900 million baht per year,” said Mr Chaiwat.
This five-year budget excludes the synthetic biology (synbio) business, which is being developed through its subsidiary BBGI Plc.
BBGI is scheduled to list on the stock market in the next couple years, so its budget will be financed from an initial public offering programme.
Moreover, BCP operates power generation from renewable resources through SET-listed BCPG Plc.
BCPG has power generation with a combined capacity of 403 megawatts from solar, wind, geothermal and hydro across Asia.