BANGCHAK CORPORATION PCL. ANALYST MEETING Q2/2020 August 19, 2020
TABLE OF CONTENT Q2/2020 01 Key Highlight Q2/2020 02 Business & Financial Performance 03 Business Outlook 2
The Worst is Behind Us … BCP Product Demand is Recovering but still below pre-COVID level due to none Jet Demand Private Consumption Index (PCI) % Unit: KBD BCP Total Sales 2019 2020 10 138 137 134 0 140 129 129 21 Mar: Thailand 127 started lockdown Jan Feb Mar Apr May Jun 134 134 3 Apr: Nationwide night 130 8 Feb Airlines -10 curfew started suspended China flights 110 115 112 Crude Run 3 & 7 May: Lockdown eased 120 115.5 114.8 98 -20 114.0 113.1 113.2 Source: Bank of Thailand 110.8 108.6 Cut as 110 Private Investment Index (PII) 105.5 demand collapsed : 100.5 led by JET 100 % demand 94.3 0 90 Jan Feb Mar Apr May Jun -5 80.5 79.1 80 -10 70 -15 60 -20 Source: Bank of Thailand 50 Jan Feb Mar Apr May Jun 3
Q2/2020 Key Highlight The COVID-19 outbreak is causing widespread impact across the globe • Economic activities slowed down has caused demand of oil consumption to decline with significance, especially Jet fuel • The fluctuation of oil price and weakened cracks spread due to the unexpected collapse of OPEC+ alliance and the COVID-19 pandemic • Crude oil price Market GRM: Singapore VS BCP 4
Q2/2020 Key Highlight Refinery Adjusted production to the optimal level of 74% utilization rate o S / D plant# 2 , to take advantage of lower demand , and so that TAM could be moved to 2021 o Delayed 3E project completion as foreign technical specialists could not get into the country o Marketing Retail sales slumped due to lockdown in April to May o Launched Gasohol S EVO family o Redesigned non-oil business model o Power Plant 1 st quarter fully realized performance of Nam San 3B hydropower plant o Bio-based Sold industrial graded ethanol 8.5 ML (27% of national sales) for alcohol gel and other disinfectant products o Natural Resources (E&P) Share of profit from OKEA below expected due low oil & gas price o OKEA: shifted Draugen turnaround from Q3 to Q2 o OKEA: as a key promoter for the change in Norway petroleum tax regime o 5
BCP Group PERFORMANCE (Consolidated) Net Profit (MB) -1,911 -6,571 o Q2 result excluding extraordinary items was profitable of 447 MB Accounting EBITDA (MB) -1,415 1,131 Bio-based Tax effect 447 848 Natural Resources 60 Core Profit Bio-based Power Plant TFRS9 339 Asset Impairment 1,633 Power Plant Impairment 863 Marketing Marketing 806 725 Refinery -785 Others -71 Refinery Net Profit Inventory Loss -3,375 (Net NRV) Natural Resources -1,166 Others -161 Q2/20 1H/20 6 6
What We Have Done So Far? Reevaluate and adjust BCP Group OPEX & CAPEX o Cut, delay , or postpone low priority projects o Follow the principles of law and must give utmost regard to safety OPEX cut 20% from the original budget CAPEX Adjustment 20% 1H2020 OPEX saving ~1,400 MB from the original budget Saving cash in 2020 Turnaround Postponed to 2021: + 1,100 MB Saving cash ~560 MB YoY Subsidiary’s project postponed: + 5,500 MB Note: OPEX = Operating cost and SG&A 7 7
TABLE OF CONTENT Q2/2020 01 Key Highlight Q2/2020 02 Business & Financial Performance 03 Business Outlook 8
BCP Group EBITDA Q2/2020 Operating EBITDA 1,131 MB EBITDA* 2,645 MB Natural o New demand from industrial grade ethanol for Bio-Based disinfectant products has yet against the Resources declining of B100 price and fuel consumption, Products resulted in -34% EBITDA QoQ o Crude run 89.3 KBD (74% utilization rate) o 60 MB share of profit from OKEA o Operating GRM increased to 3.93 $/BBL o OKEA production at ~16 kboe/d due to lower crude premium o COVID-19 affecting global oil demand causing Electricity sales increase +34% QoQ o an inventory loss of 3,278 MB and NRV reversal of 1,412 MB Nam San 3B has realized full operational performance o for the first time, leading Hydroelectricity sales to Refinery & Trading increase 113% QoQ Share of profit of 102 MB o Power Plant o Sales volumes dropped 20% QoQ from industrial sales JET slumped o MKM 0.90 Baht/Litre , spontaneously improved Other as % of retail sale jumped Marketing o Inventory loss of 83 MB and NRV reversal of 154 MB Note: *excludes Inventory gain/loss and Gain/loss from FX forward contracts 9
Refinery and Trading Business: Q2/2020 Operating EBITDA 869 MB (+85% QoQ) Crude run Product Yield Operating GRM Hedging Inventory Gain/Loss 94% 93% 140 2% GRM Performance ($/BBL) 87% LPG 81% 90% 130 74% 120 Gasoline 19% Production Profile 0.001 0.001 70% 0.14 0.26 110 100 4.95 112.7 111.4 3.93 4.20 3.36 2.87 50% (0.09) 104.3 90 96.8 80 (0.33) (0.18) 89.3 30% 70 (7.15) Diesel (8.29) (9.29) 64% 60 10% 50 40 -10% 30 4.53 (6.16) 4.02 (4.78) (3.22) 20 -30% UCO 4% 10 10% FO 0 -50% Q2/19 Q1/20 Q2/20 1H/19 1H/20 Q2/19 Q1/20 Q2/20 1H/19 1H/20 Q2/20 Q2/2020 operating GRM was increased as crude premium o 20 Crack Spreads ($/BBL) decline , resulted from COVID-19 aggressive impact on global oil demand 15 10 together with Saudi Arabia lower their crude OSP GO/DB 5 LSFO/DB Crude price was severely pressured as COVID-19 lessened oil demand, especially o UNL95/DB 0 IK/DB in April in which average Dubai price was 21 $/BBL, resulted in inventory loss HSFO/DB -5 of 3,278 MB and NRV reversal of 1,412 MB -10 Despite lower oil transaction due to the declining oil demand but BCPT o -15 recorded increase in gross profit attributed to the increase in value of -20 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 LSFO product group 10
Marketing Business: Q2/2020 Operating EBITDA 653 MB (-3% QoQ) Total Sales Volume (ML/Mo) Fuel consumption was still under the pressure of COVID-19 control o 400 measures. Total sales volume 20% dropped QoQ . Retail sales Retail volume slightly decreased by 5% QoQ while industrial sales volume 300 declined 57% HSD, MOFUEL & JET Sale Volume (ML) 200 1,000 715 708 800 HSD 600 100 410 Export 353 MOGAS 400 Industrial 216 200 7 Wholesale JET 0 0 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q1/16 Q1/17 Q1/18 Q1/19 Q1/20 2016 2017 2018 2019 Q1/20 Q2/20 Net Marketing Margin (Baht/Litre) Net Marketing Margin increased 15% QoQ as the sale proportion o 0.90 of retail market, which margin is considerably higher than industrial 0.84 0.83 market’s margin, increased 0.79 0.77 Inventory loss of 83 MB and NRV reversal of 154 MB o Q2/19 Q1/20 Q2/20 1H/19 1H/20 * *Net MKM excludes Inventory Gain/(Loss) and NRV 11
Marketing Network 1,21 2 Retail Sales Volume Market Share (%) service stations as of Jun 2020 6M/2019 6M/2020 597 sites Source: DOEB & BCP Standard Type 6 1 5 sites COOP Type 40.2% 41.5% 15.8% 15.6% 12.2% 12.1% 11.6% 11.3% 10.2% 10.0% 2.1% 1.8% 1.7% 1.9% 2.1% 1.6% 4.1% 4.1% o 618 stores as June 2020 o SPAR is under business restructuring 12
Power Plant Business: Q2/2020 EBITDA 863 MB (+12% QoQ) Electricity Sales (Million kWh) Performance improved. Laos hydropower was the main leader, Laos JP TH 264 added by higher share of profit. 107 157 151 Electricity sales +34% QoQ . 9 8 113 Hydroelectricity sales in Laos increased 113% as entering 73 o 81 34 high season in late of Q2; in addition with Nam San 3B has realized full 5 5 148 149 3 results for the first time after the acquisition 76 75 74 JP - solar sales increased attributed to seasonal factors o Q2/19 Q1/20 Q2/20 1H/19 1H/20 TH - solar sales insignificantly changed, while the wind performance o decreased as it was low season Operating Capacity (MW PPA) 452 452 452 Share of profit 102 MB (+13% QoQ) Hydro 114 114 114 335 331 Geothermal power plant 118 MB Wind o 14 14 14 14 14 Geothermal PH Wind power plant -15 MB mainly from weakening airstream o 158 158 158 158 158 during the off-season Solar 15 15 15 15 15 Solar & 152 152 152 148 144 Wind Q2/19 Q1/20 Q2/20 1H/19 1H/20 13
Bio-Based Product Business: Q2/2020 EBITDA 339 MB (-34% QoQ) POWER PLANT BUSINESS Biodiesel Production & Sales Volume (Million Litres) Ethanol Production & Sales Volume (Million Litres) Production Sales Production Sales 153 141 132 120 98 96 94 84 82 74 69 63 61 60 48 47 46 44 44 40 Q2/19 Q1/20 Q2/20 1H/19 1H/20 Q2/19 Q1/20 Q2/20 1H/19 1H/20 B100 Average Price (Baht/Litre) Ethanol Average Price (Baht/Litre) 26 40 35 24 30 25 22 20 Source: EPPO Source: EPPO 15 20 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 2Q2020 profit was weakened from the decline in biodiesel The outbreak brought new opportunity demand during the COVID-19 While the ethanol demand for fuel consumption decreased, industrial - o Revenue and gross profit dropped 38% and 69% QoQ respectively by grade demand for alcohol gel and other disinfectant products pushed o the decrease in sales and B100 price, yet improved 6% and 80% YoY ethanol price and supported sales, leading 2Q2020 revenue and gross from the comparatively higher B100 price and production cost reduction profit to increase 17% and 54% QoQ 14
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