BANGCHAK CORPORATION PCL. ANALYST MEETING Q2/2020 August 19, 2020 - - PowerPoint PPT Presentation

BANGCHAK CORPORATION PCL. ANALYST MEETING Q2/2020

August 19, 2020

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01 02 03

Q2/2020 Key Highlight

TABLE OF CONTENT

Q2/2020 Business & Financial Performance Business Outlook

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129 137 134 138 127 129 134 134 112 98 115 110

BCP Product Demand is Recovering

but still below pre-COVID level due to none Jet Demand

• 20
• 10

10 Jan Feb Mar Apr May Jun

• 20
• 15
• 10
• 5

Jan Feb Mar Apr May Jun

The Worst is Behind Us…

Private Investment Index (PII) Private Consumption Index (PCI)

Source: Bank of Thailand Source: Bank of Thailand

% %

BCP Total Sales Crude Run Unit: KBD

2019 2020

Cut as demand collapsed: led by JET demand

8 Feb Airlines suspended China flights 21 Mar: Thailand started lockdown 3 Apr: Nationwide night curfew started 3 & 7 May: Lockdown eased

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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

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• Adjusted production to the optimal level of 74% utilization rate
• S/D plant#2, to take advantage of lower demand, and so that TAM could be moved to 2021
• Delayed 3E project completion as foreign technical specialists could not get into the country

Refinery Marketing

• Retail sales slumped due to lockdown in April to May
• Launched Gasohol S EVO family
• Redesigned non-oil business model

Natural Resources (E&P)

• Share of profit from OKEA below expected due low oil & gas price
• OKEA: shifted Draugen turnaround from Q3 to Q2
• OKEA: as a key promoter for the change in Norway petroleum tax regime

Power Plant

• 1st quarter fully realized performance of Nam San 3B hydropower plant
• Sold industrial graded ethanol 8.5 ML (27% of national sales) for alcohol gel and other disinfectant products

Bio-based

Q2/2020 Key Highlight

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BCP Group PERFORMANCE

(Consolidated)

• Q2 result excluding extraordinary items was profitable of 447 MB

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Refinery

• 785

Refinery

• 3,375

Marketing 725 Marketing 806 Power Plant 863 Power Plant 1,633 Bio-based 339 Bio-based 848 Natural Resources 60 Natural Resources

• 1,166

Others

• 71

Others

• 161

Q2/20 1H/20

1,131

• 1,415

Net Profit (MB) Accounting EBITDA (MB)

• 1,911
• 6,571

Inventory Loss (Net NRV) Asset Impairment TFRS9 Impairment

Tax effect Core Profit Net Profit

447

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What We Have Done So Far?

CAPEX Adjustment 20%

Saving cash in 2020 Turnaround Postponed to 2021: +1,100 MB Subsidiary’s project postponed: +5,500 MB Reevaluate and adjust BCP Group OPEX & CAPEX

• Cut, delay, or postpone low priority projects
• Follow the principles of law and must give utmost regard to safety

OPEX cut 20% from the original budget

1H2020 OPEX saving ~1,400 MB from the original budget Saving cash ~560 MB YoY

Note: OPEX = Operating cost and SG&A

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01 02 03

Q2/2020 Key Highlight

TABLE OF CONTENT

Q2/2020 Business & Financial Performance Business Outlook

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BCP Group EBITDA Q2/2020

EBITDA 1,131 MB Operating EBITDA* 2,645 MB

• Crude run 89.3 KBD (74% utilization rate)
• Operating GRM increased to 3.93 $/BBL

due to lower crude premium

• COVID-19 affecting global oil demand causing

an inventory loss of 3,278 MB and NRV reversal of 1,412 MB

Refinery & Trading Power Plant

• Electricity sales increase +34% QoQ
• Nam San 3B has realized full operational performance

for the first time, leading Hydroelectricity sales to increase 113% QoQ

• Share of profit of 102 MB
• Sales volumes dropped 20% QoQ from

industrial sales JET slumped

• MKM 0.90 Baht/Litre, spontaneously improved

as % of retail sale jumped

• Inventory loss of 83 MB and NRV reversal of

154 MB

Marketing Bio-Based Products

• New demand from industrial grade ethanol for

disinfectant products has yet against the declining of B100 price and fuel consumption, resulted in -34% EBITDA QoQ

Natural Resources

• 60 MB share of profit from OKEA
• OKEA production at ~16 kboe/d

Other

Note: *excludes Inventory gain/loss and Gain/loss from FX forward contracts

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• Q2/2020
• perating

GRM was increased as crude premium decline, resulted from COVID-19 aggressive impact on global oil demand

together with Saudi Arabia lower their crude OSP

• Crude price was severely pressured as COVID-19 lessened oil demand, especially

in April in which average Dubai price was 21 $/BBL, resulted in inventory loss

• f 3,278 MB and NRV reversal of 1,412 MB
• Despite lower oil transaction due to the declining oil demand but BCPT

recorded increase in gross profit attributed to the increase in value of

LSFO product group

• 50%
• 30%
• 10%

10% 30% 50% 70% 90% 10 20 30 40 50 60 70 80 90 100 110 120 130 140

Q2/19 Q1/20 Q2/20 1H/19 1H/20 4.95 2.87 3.93 4.20 3.36 (0.09) 0.26 0.001 0.001 0.14 (0.33) (9.29) (7.15) (0.18) (8.29) Q2/19 Q1/20 Q2/20 1H/19 1H/20

Operating GRM Hedging Inventory Gain/Loss

Refinery and Trading Business: Q2/2020 Operating EBITDA 869 MB (+85% QoQ)

Crack Spreads ($/BBL) GRM Performance ($/BBL) Production Profile

4.53 (6.16) (3.22) 4.02 (4.78)

Crude run

Q2/20

Product Yield

• 20
• 15
• 10
• 5

5 10 15 20

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Marketing Business: Q2/2020 Operating EBITDA 653 MB (-3% QoQ)

715 708 410 353 216 7

200 400 600 800 1,000 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20

HSD MOGAS JET

HSD, MOFUEL & JET Sale Volume (ML)

• Fuel consumption was still under the pressure of COVID-19 control
• measures. Total sales volume 20% dropped QoQ. Retail sales

volume slightly decreased by 5% QoQ while industrial sales volume declined 57%

0.83 0.79 0.90 0.77 0.84

Q2/19 Q1/20 Q2/20 1H/19 1H/20

*

*Net MKM excludes Inventory Gain/(Loss) and NRV

Net Marketing Margin (Baht/Litre)

100 200 300 400

Q1/16 Q1/17 Q1/18 Q1/19 Q1/20

Retail Industrial Wholesale Export

Total Sales Volume (ML/Mo) 2016 2017 2018 2019 Q2/20 Q1/20

• Inventory loss of 83 MB and NRV reversal of 154 MB
• Net Marketing Margin increased 15% QoQ as the sale proportion
• f retail market, which margin is considerably higher than industrial

market’s margin, increased

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Marketing Network

15.8% 12.2% 12.1% 10.2% 4.1% 1.9% 1.8% 1.7% 15.6% 11.3% 11.6% 10.0% 4.1% 2.1% 2.1% 1.6% 6M/2019 6M/2020

Source: DOEB & BCP

Retail Sales Volume Market Share (%)

40.2% 41.5%

service stations as of Jun 2020

1,212

Standard Type

597 sites

COOP Type

615 sites

• 618

stores as June 2020

• SPAR is under business restructuring

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Power Plant Business: Q2/2020 EBITDA 863 MB (+12% QoQ)

148 152 152 144 152 15 15 15 15 15 158 158 158 158 158 14 14 14 14 14 114 114 114 335 452 452 331 452 Q2/19 Q1/20 Q2/20 1H/19 1H/20

Solar & Wind Solar Geothermal Wind Hydro

Operating Capacity (MW PPA)

76 75 74 148 149 5 3 5 9 8 34 73 107 81 113 151 157 264 Q2/19 Q1/20 Q2/20 1H/19 1H/20 Laos JP TH

Electricity Sales (Million kWh) Performance improved. Laos hydropower was the main leader, added by higher share of profit. Electricity sales +34% QoQ.

• Hydroelectricity sales in Laos increased 113% as entering

high season in late of Q2; in addition with Nam San 3B has realized full results for the first time after the acquisition

• JP - solar sales increased attributed to seasonal factors
• TH - solar sales insignificantly changed, while the wind performance

decreased as it was low season

Share of profit 102 MB (+13% QoQ)

• Geothermal power plant 118 MB
• PH Wind power plant -15 MB mainly from weakening airstream

during the off-season

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POWER PLANT BUSINESS

Bio-Based Product Business: Q2/2020 EBITDA 339 MB (-34% QoQ)

74 61 60 141 120 82 69 63 153 132

Q2/19 Q1/20 Q2/20 1H/19 1H/20

Production Sales

15 20 25 30 35 40 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Source: EPPO

2Q2020 profit was weakened from the decline in biodiesel demand during the COVID-19

• Revenue and gross profit dropped 38% and 69% QoQ respectively by

the decrease in sales and B100 price, yet improved 6% and 80% YoY from the comparatively higher B100 price and production cost reduction B100 Average Price (Baht/Litre)

Biodiesel Production & Sales Volume (Million Litres) Ethanol Production & Sales Volume (Million Litres)

44 48 47 98 96 46 40 44 94 84

Q2/19 Q1/20 Q2/20 1H/19 1H/20

Production Sales

Ethanol Average Price (Baht/Litre)

20 22 24 26 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Source: EPPO

The outbreak brought new opportunity

• While the ethanol demand for fuel consumption decreased, industrial -

grade demand for alcohol gel and other disinfectant products pushed ethanol price and supported sales, leading 2Q2020 revenue and gross profit to increase 17% and 54% QoQ

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Share of profit 60 MB from OKEA OKEA performance:

• Total net production was reduced to 16.0 kboe/d due to planned

shutdown at Draugen and GjØa

• Significantly lower market prices, and fewer lifting from Draugen

resulted in revenue decreased

• Currency gain on bond loans due to strengthening of NOK against USD
• Impairments relate to the Yme asset under development and

Technical goodwill on Draugen and Gjøa, driven by the

strengthening of NOK against USD, increased capital expenditures estimates for the Yme project and reduced reserve estimates for the P1 project on Gjøa

Natural Resources Business: Q2/2020 EBITDA 60 MB (+105% QoQ)

Realized Price

Source: OKEA

9.2 8.9 7.9 10.5 9.8 7.8 20.0 19.1 16.0 Q2/19 Q1/20 Q2/20

Ivar Assen Gjoa Draugen

60.7 48.4 24.9 4.1 2.7 1.4

Q2/19 Q1/20 Q2/20

Gas Price ($/MMBTU) Liquid Price ($/boe) Production Volume - Net to OKEA (kboe/d)

BCPR holds 46.32 % in OKEA ASA

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Statement of Income: Consolidated

Statement of Income (Unit:MB) Q2/2019 Q1/2020 Q2/2020 Revenue 48,326 43,070 26,594 Cost of goods sold (45,738) (44,287) (26,036) Gross Profit 2,588 (1,216) 558 Other income 108 105 187 Selling and administrative expenses (1,897) (1,763) (1,585) Exploration and evaluation expense (0.2)

• Gain (loss) from derivatives

(1) (360) 283 Gain (loss) on foreign exchange 168 326 132 Loss from impairment of assets

• (1,404)

(83) Profit (Loss) from operating activities 965 (4,311) (508) Finance costs (421) (464) (517) Impairment gain(loss) (TFRS9)

• 5

(895) Share of profit(loss) of associate and JV 156 (1,082) 169 Profit (Loss) before income tax expense 700 (5,852) (1,751) Tax income (expense) (25) 1,536 26 Profit (loss) for the period 675 (4,316) (1,725) Owners of the Company 528 (4,661) (1,911) Non-controlling interests 147 345 185 Earnings per share (Baht per Share) 0.38 (3.49) (1.50)

Bongkot Marine Services 8 MB Ubon Bioethanol Plc.

• 2 MB

Petrowind Energy Inc.

• 15 MB

Star Energy Group Holdings Pte. Ltd 118 MB OKEA ASA 60 MB 169 MB

 Share of Profit  Recorded asset impairments mainly from the BCR retail business

restructuring 135 MB

 Recorded 895 MB impairment loss of major trade account receivable, as client went into business rehabilitation under the

supervision of the Central Bankruptcy Court

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52,584 54,062 37,583 48,514 3,149 2,315 15,835 11,487 11,073 4,662 7,564 18,094

31 Dec 19 30 Jun 20

Unit: MB

Assets

Statement of Financial Position

Cash & ST investments Others Current Assets PP&E Inventories Non Current Assets 139,133 127,788 31 Dec 19 30 Jun 20 Change Total Assets 127,788 139,113 9% Total Liabilities 68,973 87,543 27% Total Equity 58,815 51,570 12%

 Cash and Cash Equivalents & ST Investments + 139%

• Mainly from Debentures Issuance of 8,000 MB

 Trade and other current receivables - 58%

• Declining in trade account receivables attributed to the company and BCPT

 Inventory - 27% due to the declining in crude oil and finished product

Non Current Assets +29% Current Assets

 Right-of-use assets and Leasehold rights 7,592 MB from TFRS 16 financial standard  Goodwill and Intangible assets 2,161 MB as BCPG acquired Namsan 3B Hydropower plant

PP&E + 3%

 Investments in Refinery assets in 3E project  BCPG & BBGI additional capacity investment  Depreciation & amortization of 1,610 MB

Trade and Other Current Receivables

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58,815 51,570 4,098 9,881 48,070 66,674 3,358 5,998 13,447 5,011 31 Dec 19 30 Jun 20 Unit: MB

Liabilities & Equities

Trade & Other Current Payables Loans & Debentures Equity Current Liabilities Non Current Liabilities

139,113 127,788

 Equities -12%

• Net loss of 6,042 MB
• Dividend payment of 575 MB
• Interest expense for hybrid bond 251 MB
• Other comprehensive income 285 MB

 Trade & other current payables - 63% mainly from the lower crude price and

sales volume in June 2020 compared to December 2019

 Non Current Liabilities + 141%

• Lease liabilities 6,128 MB under TFRS 16

 Current Liabilities + 78%

• Current portion of lease liabilities

1,516 MB from TFRS 16

 Loans & Debentures + 39% for liquidity management and subsidiaries’

investments

• Short-term loan

2,773 MB

• Loans from financial institutions and debentures 15,859 MB

Tenors Fixed rate (%) 2 yrs. 2.6% 7 yrs. 3.0% 10 yrs. 3.4% 8,000MB bond: issued in May 31 Dec 19 30 Jun 20 Change Total Assets 127,788 139,113 9% Total Liabilities 68,973 87,543 27% Total Equity 58,815 51,570 12%

Statement of Financial Position

19 Beginning Cash 7,276 MB Ending Cash 18,094 MB FX adjustment MB (214) Cash movement 11,032 MB

Statement of Cash Flow

11,776 8,000 2,904 856 (714) (4,822) (3,759) (3,209) Debt Service PP&E Investment & Loan to Subsidiaries & Asso. Dividend paid & Others Tax received & Others Funding

Unit: MB

Sources of Cash 23,536 Uses of Cash (12,504) Debenture Net cash generated from operating

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01 02 03

Q2/2020 Key Highlight

TABLE OF CONTENT

Q2/2020 Business & Financial Performance Business Outlook

What We Will Do Next?

Synergy between BCP Group

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Refinery Business

 Improve efficiency of logistics management  Promote safety and control oil loss during the process Signed memorandum of agreement to partner with 3 oil transporters

Smart Logistics and Inventory Management (SLIM)  2020 Estimated benefit ~460 MB

Maximize Value from current assets

 Prepare for Euro V as next milestone  Identify alternative product development and new market opportunities Exploring the Potential Growth Opportunities  TAM in Mid Q1/21

• 39 days
• Tie in with HCU

 Crude run at ~ 100 KBD in 2H

• Has not been able to ramp up production level due to

demand for Jet remains low

• Ready!! to feed up to 110+ KBD, when the demand

rebounds

3.36 ~ 4 1H/20 2H/20

Operating GRM:

($/BBL)

High product inventory Lockdown easing To slightly improve in 2H 22

23

400 800 1,200 1,600 Q1 Q2 Q3 Q4

2019 2020

• Retail sales rebounded since mid - Q2,

after reached the bottom in Apr 20

• Industrial sales is starting to increase as

the lockdown lifted, while jet sales is likely to pick up in Q4

Sales Volume (ML) (Exclude Jet Fuel)

Marketing Business

PRODUCT BALANCE & MARGIN MANAGEMENT

• Integration with refinery to provide maximum benefits
• Push forward higher sales volume through the highest margin channel

PREMIUM PRODUCT DEVELOPMENT

• Environmentally friendly products

BCP 9.9%

Market Share (Jan – Jun 2020)

In 1,115 stations In 888 stations

Domestic lubricant market share data From the Department of Energy Business (Petroleum trader in accordance with section 7)

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Marketing Business

N E W N O R M A L SERVICE WITH UNIQUE EXPERIENCE

+54 Service stations in 2020

With Unique Design Service Station sites

40

(est. end of 2020)

• Non-oil partnership enhancement & New

business model

• BCP service stations equipped with non-oil business to

maximize return per space utilization

+160 Inthanin Store in 2020

“You Stay Home, We Delivery for You” campaign

actively performed and online sales doubled during COVID-19 outbreak 24

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BCP Group Business Update

BIODIESEL BUSINESS

+Refined Glycerin 27,000 Ton/Y

(COD Q4/20)

ETHANOL BUSINESS

KGI-NP +200,000 L/D

(COD Q4/21) OKEA  Negative tax regime allows significantly liquidity improvement and profitable projects reassessment  Projects’ production scheduled

• P1/Gjoa will first oil in Q4/20
• Yme will first oil in 2H/21

 Plan to submit IPO filling in late 2020  Investing in biotechnology and pioneering high value bio-based product  Additional Production Capacity  Investment in RPV Energy (4 solar plants totaling 20 MW) expects to realize revenue from 3rd quarter  Benefit from Hydropower plants’ high season  Benefit from sharp decrease of interest rate  EBITDA growth target of 2020 remains at 20%  To get PPA of SWAN within 2020 LAC  Stock price jumped > 50% as Tesla’s new ‘Terafactory’ prep underway

• Aug. 18

Announced in late July

Stock price TSX: LAC

Mark to market gain ~ 117 MCAD

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Q&A Session

ir@bangchak.co.th

• Tel. +66 2335 8663 / 8518 / 4370

www.bangchak.co.th

THANK YOU

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THANK YOU

Disclaimer The information contained herein is being furnished on a confidential basis for discussion purposes only and only for the use of the recipient, and may be subject to completion or amendment through the delivery of additional documentation. Except as otherwise provided herein, this document does not constitute an offer to sell or purchase any security or engage in any transaction. The information contained herein has been obtained from sources that Bangchak Corporation Public Company Limited (“BCP”) considers to be reliable; however, BCP makes no representation as to, and accepts no responsibility or liability for, the accuracy or completeness of the information contained herein. Any projections, valuations and statistical analyses contained herein have been provided to assist the recipient in the evaluation of the matters described herein; such projections, valuations and analyses may be based on subjective assessments and assumptions and may utilize one among alternative methodologies that produce differing results; accordingly, such projections, valuations and statistical analyses are not to be viewed as facts and should not be relied upon as an accurate representation of future events. The recipient should make an independent evaluation and judgment with respect to the matters contained herein.

ir@bangchak.co.th

• Tel. +66 2335 8663 / 8518 / 4370

www.bangchak.co.th