Bangchak Corporation Plc. Opportunity Day Q1/2019 22 nd May 2019 - - PowerPoint PPT Presentation

Bangchak Corporation Plc.

Opportunity Day Q1/2019

22nd May 2019

Table of Content

Q1/19 Financial Performance

02 03

Appendices

04

Q1/19 Performance Update

01

Business Updates

BCP Group Performance – Q1/2019 Key Takeaways

3

Marketing

• Total sales volume stable, Retail sales grew 4% YoY
• Net MKM at 71 st./litre soften following crude oil price upward trend
• Maintained 2nd rank (15.6%) retail sales market share as of 3M19

Refinery & Trading

• Crude run at 110 KBD
• Total GRM declined to 3.49 $/BBL from dropping crack spreads
• BCPT continue to increase trading volume
• Unexpected HCU gas compressor maintenance

Power Plant

• Electricity generation from solar power plant remained stable
• Irradiation rate stable YoY, but increased QoQ after winter season ended
• Ft rate recovering, leading electricity rate received to be on a rising trend
• Share of profit from operation of Geothermal & Wind power plant improved

Bio-Based Product

• Ethanol sales volume increased from capacity added from KGI (+100 KL/day)
• Decreasing price of both ethanol & B100 resulting in margin squeeze

Natural Resources

• Realize full quarter share of profit from OKEA at 8 MB, less than expected due to

impairment loss on goodwill of Gjoa oil field acquisition from lowered gas price

• Production net to OKEA 19.5 kboe/d
• FX loss 99 MB from foreign currency loan to subsidiary

1,279

• 1,419

517 735 465 612 694 570 736 304 66 194 68 94

• 19

Natural Resources Bio-Based Products Power Plant Marketing Refinery & Trading

EBITDA Performance

1,959 3,023

• 317

1Q/18 4Q/18 1Q/19

1,168

• 1,546

214

Net Profit

attributable to

• wners of the

parent

1Q/18 4Q/18 1Q/19

BCP Group Portfolio – Refinery & Marketing Business

Bangchak Corporation Plc.

4

Refinery and Trading Business Marketing Business

BCP Group Portfolio – Subsidiaries

BCP Group Portfolio

Refinery & Marketing

Refinery Business

Bangchak Corporation Plc.

5 LPG Gasoline Jet Diesel Fuel Oil UCO Domestic Middle East 9% 12% 7% 12% 14% 3% 3% 5% 3% 3% 53% 53% 53% 53% 50% 12% 12% 14% 11% 12% 21% 17% 19% 18% 18% 3% 3% 2% 3% 2% Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 31% 29% 28% 24% 32% 12% 17% 20% 28% 12% 57% 49% 52% 48% 56% 5% 1% Q1/18 Q2/18 Q3/18 Q4/18 Q1/19

BCP Refinery Product Yield BCP Refinery Crude Sourcing

109.4 66.8 118.8 114.3

110.1

91% 56% 99% 95% 92%

• 50%
• 30%
• 10%

10% 30% 50% 70% 90% 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0 110.0 120.0 130.0 140.0

Q1/18 Q2/18 Q3/18 Q4/18 Q1/19

Crude Run Utilization

TAM = Turnaround Maintenance Period

Production Profile

Actual Crude Run Unit: KBD

TAM

• 4 months consecutive squeezed GRM for the first

time in decade

• Price & Margin recover in March, but Hydrocracker

went through maintenance

• Plan shutdown in July

Far East Others

Refinery Business

Bangchak Corporation Plc.

6

Refinery EBITDA

Unit: THB Million Unit: THB Million

1,279 1,929 2,140

• 1,419

517 1,348 977 1,927 1,077 548 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Accounting Operating

6.71 8.81 7.59 5.94 3.43

• 0.12
• 0.39
• 0.21
• 0.40

0.09

• 0.22

4.39 0.66

• 7.25
• 0.03

6.37 12.82 8.05 -1.72 3.49

GRM Performance Unit: $/BBL

Inventory G/L Oil Hedging Market GRM

Q1/18 Q2/18 Q3/18 Q4/18 Q1/19

Weaker GRM from global production over supply led to narrowed crack spreads 9 MB Inventory Loss, as BCP crude feed reflect average crude oil cost in Q4/18 which has higher average price than Q1/19 BCP Trading EBITDA 39 MB increased from higher transactions after tapping to new products and new trade partners

• 8
• 3

2 7 12 17

Q1/18 Q2/18 Q3/18 Q4/18 Q1/19

GO/DB UNL95/DB IK/DB FO/DB

AVG Crack spread movement ($/BBL)

52 57 62 67 72 77

Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 DB DTD

AVG Crude oil price movement ($/BBL)

* Operating EBITDA : exclude Inventory gain/loss, One-time items, Gain/loss from FX forward contracts

Distribution channel – Retail market sales continues to grow as our main priority

Bangchak Corporation Plc.

7

Total Sales Volume

Unit: % Portion of total sales volume in Q1/19

7% 26% 13%

Retail Market Industrial Market Wholesales Export

Marketing Business

54%

284 307 334 342 344 179 190 184 167 163 51 86 58 50 46 93 82 112 111 82

50 100 150 200 250 300 350 Unit: Million Litre / Month (monthly AVG in the quarter)

Total Sales Volume Retail Market Industrial Market Wholesales Exports 997 517 151 199 1,032 489 138 246 200 400 600 800 1000 1200 Retail Industrial Wholesales Export Q1/18 Q1/19

Unit: Million Litres

(+4%)

(retail market portion

+1% from Q1/18)

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2015 2016 2017 2018 2019

Marketing Performance – Retail market is the main priority

Bangchak Corporation Plc.

8

Marketing EBITDA

Unit: THB Million

735 509 468 465 612 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19

Net Marketing Margin

Unit: Baht/Litre

0.83 0.75 0.70 0.85 0.71 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19

Total sales volume remained unchanged

• Retail sales volume grows 4% YoY from customer base expansion,

service station sales push, and B20 & Hi-Premium diesel promotion

• Industrial sales volume reduced 5% YoY from the intensified

competition and BCP sales channel management Total Marketing Margin declined from the higher product cost following crude oil price upward trend, and price promotion Bangchak Retail Revenue grew 31% YoY

147 161 170 201 193 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19

Bangchak Retail Revenue

Unit: THB Million

Marketing Network – Increasing Market Share & Thruput per station

Bangchak Corporation Plc.

9

Market Share

(Retail Channel)

Jan-Mar’18 Jan-Mar’19 change

40.9% 39.9%

15.5% 15.6%

12.8% 12.5% 11.9% 12.4% 9.3% 10.0% 4.4% 4.2% 1.8% 1.7% 1.7% 1.8% 1.7% 1.9%

+10

New Service Stations service stations as of Mar 2019

1,176

Standard Type

562 sites

(≈78% of Retail Sales Volume)

COOP Type

614 sites

(≈22% of Retail Sales Volume)

529 branches

Mar’19

+6 stores

47 stores

+2 stores

Mar’19

Supporting non-oil businesses Service stations outlets

444 457 460 499 527 559

392 436 479 510 496

485

416 450 464 451 446 435 200 400 600 800 1000 1200 1400 1600 1800 2000 200 300 400 500 2014 2015 2016 2017 2018 Q1/2019

*AVG Major Oil : PTT, ESSO, SHELL, CALTEX

Thruput per station

(K.Litre / Mo) AVG Major Oil (excl. BCP) Number of standard stations

BCP Standard

Bangchak Corporation Plc.

10

Power Plant Business Bio-based Products Business Natural Resources Business

BCP Group Portfolio – Refinery & Marketing Business BCP Group Portfolio – Subsidiaries

BCP Group Portfolio

Subsidiaries

Power Plant Business – BCPG

Bangchak Corporation Plc.

11

130 130 139 139 139 30 34 34 15 15 158 158 158 158 158 14 14 14 14 14 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Operating Capacity (MWac)

Solar Solar Geothermal Wind

694 793 1,542 570 736 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19

Green Power Plant EBITDA

Unit: THB Million

332 336 345 326 326 66.0 66.7 64.2 73.0 71.9 9.2 14.9 13.9 3.9 4.1 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 JP TH 75.2 81.6 78.1 76.9 76.0

Electricity Sales

Unit: Million kWh

Solar Electricity Sales remained at the same level mainly from:

• Increase from COD of War Veteran Organization Solar

project in Jul’18 (9 MW) & Gotemba (4 MW)

• Decrease from the selling of Nikaho & Nagi project in

Sep’18 (total 19 MW)

• Irradiation rate remained stable YoY but increased QoQ

due to seasonal effect Higher share of profit from associated companies:

• Geothermal power plant : 93 MB
• Wind power plant : 29 MB

Profit from Japan solar plant sold (793 MB) Geothermal Plant Tax Provision (-84 MB)

Bio-Based Product Business – BBGI

Bangchak Corporation Plc.

12

Bio-Based Product EBITDA

Biodiesel Performance

• Sales volume declined 2% YoY and 4% QoQ from higher

competition, after Thailand B100 supply capacity increased, led to higher market competition

• Gross margin soften 54% YoY, mainly the effect of higher

competition and lower glycerin margin, but better 37% QoQ from the better price situation

Ethanol Performance

• Sales volume growth 37% YoY and 48% QoQ

mainly from capacity increment from KGI plant (+100 KL/day)

• Gross margin soften 26% YoY from ethanol price decline, but

better QoQ as KSL plant finished its TAM in Q4/18

Unit: THB Million

304 171 151 66 194 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19

* Operating EBITDA : exclude Inventory gain/loss, One-time items, Gain/loss from FX forward contracts

35 35 46 32 48 73 68 66 74 71 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Ethanol B100

Biofuel Sales Volume

Unit: million litres 18 20 22 24 26 28 30 32 34 36

Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19

Ethanol B100

Biofuel Price Movement

Unit: Baht / litre Source: EPPO

Natural Resource Business – Petroleum Exploration & Production

Bangchak Corporation Plc.

13

• Full quarter share of profit from OKEA 8 MB
• Profit contributed from OKEA was less than expected due

to impairment loss on goodwill of Gjoa oil field acquisition from lowered gas price

• FX loss 99 MB from foreign currency loan to subsidiary

Natural Resources EBITDA

Unit: THB Million

68 36

• 81

94

• 19

Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 8.60 10.50 0.37

Q1/19 Production Volume (Net to OKEA)

Unit: kboe/d

Draugen Gjoa Ivar Assen

Table of Content

Q1/19 Financial Performance

02

Business Updates

03

Appendices

04

Q1/19 Performance Update

01

Q1/2019 Highlights

Bangchak Corporation Plc.

15

• The performance was still affected by soften refinery market GRM and a maintenance of the

Hydrocracking Unit’s Gas Compressor

• LAC: Related transactions
• Additional loan to LAC 13 MUSD (414 MB)
• Fair value on available-for-sale investment of LAC share price increased from CAD 4.31 as of 31 December

2018, to CAD 5.06 as of 31 March 2019

• OKEA AS: Record a share of profit 8 MB
• Impairment loss on technical goodwill has been recognized for Gjøa oil field acquisition following

the lower gas prices

• International Financial Reporting Standards 15, Revenue from Contract with Customers

It has an effect in the sales of steam according to the Minimum take or pay contract of an associated company’s group in Indonesia which was enforced on the 1st of January

Statement of Income - Consolidated

Bangchak Corporation Plc.

16

Remark:

(Unit: MB)

Revenue Revenue portion from subsidiaries increased by 6% YoY, 7% QoQ Other Income +37% YoY, -37% QoQ Increased YoY from

• BCR: Recorded purchase rebate 11 MB in Q1/2019

Decreased QoQ from

• E&P: Realized profit from the provision of working capital settlement

following the share disposal in Nido Production (Galoc) Pty. Ltd. of 10 MB in Q1/2019, while recorded 69 MB in Q4/2018 Gross Profit -34% YoY, +415% QoQ

Unit: MB

Statement of Income

Q1/2018 Q4/2018 Q1/2019

(Restated)

Revenue 44,226 48,781 45,535 Cost of goods sold (40,897) (48,357) (43,355) Gross Profit 3,328 424 2,181 Investment income and dividend income 16 16 37 Other income 59 129 81 Selling and administrative expenses (1,669) (2,163) (1,725) Gain (loss) from oil hedging contract (73) (138) 29 Gain (loss) from FX forward contracts

• 95

(11) Gain (loss) on foreign exchange 172 52 57 Loss from impairment of assets

• (15)
• Share of profit of associate and JV

123 21 157 EBIT 1,956 (1,579) 806 Finance costs (365) (405) (443) Income tax expense (223) (509) 32 Profit for the period 1,368 (1,475) 395 Owners of the Company 1,168 (1,546) 214 Non-controlling interests 200 71 181 Earnings per share (Baht per Share) 0.85 (1.12) 0.16

(Unit: MB)

(Unit: $/BBL)

Q1/2018 Q4/2018 Q1/2019 Market GRM 6.71 5.94 3.43 Inv G/L & Hedging (0.34) (7.65) 0.06 Total GRM 6.37 (1.72) 3.49

Statement of Income - Consolidated

Bangchak Corporation Plc.

17

Remark:

(Unit: MB)

Selling and administrative expense +3% YoY, -20% QoQ

• YoY increased from depreciation and amortization from BCP and BCPR

business expansion

• QoQ decreased mainly from Q4 normally incur in higher expenses

disbursement

Unit: MB (Unit: MB)

Share of profit of associate and JV 157 MB

• Star Energy Group Holdings Pte. Ltd

93 MB

• Petrowind Energy Inc.

29 MB

• Ubon Bioethanol Plc.

18 MB

• Bongkot Marine Services

10 MB

• OKEA AS

8 MB Finance Costs +21% YoY, +9% QoQ

• Mainly from BCP bond issuance 11,000 MB in 2H2018

Income Tax 32 MB

• In Q1/2019 the company recorded revenue from income tax expense item.

A result of deferred income tax liability from a reversal of LCM in Q1/2019

(Unit: MB) Unit: MB

Statement of Income

Q1/2018 Q4/2018 Q1/2019

(Restated)

Revenue 44,226 48,781 45,535 Cost of goods sold (40,897) (48,357) (43,355) Gross Profit 3,328 424 2,181 Investment income and dividend income 16 16 37 Other income 59 129 81 Selling and administrative expenses (1,669) (2,163) (1,725) Gain (loss) from oil hedging contract (73) (138) 29 Gain (loss) from FX forward contracts

• 95

(11) Gain (loss) on foreign exchange 172 52 57 Loss from impairment of assets

• (15)
• Share of profit of associate and JV

123 21 157 EBIT 1,956 (1,579) 806 Finance costs (365) (405) (443) Income tax expense (223) (509) 32 Profit for the period 1,368 (1,475) 395 Owners of the Company 1,168 (1,546) 214 Non-controlling interests 200 71 181 Earnings per share (Baht per Share) 0.85 (1.12) 0.16

(Unit: MB)

Financial Position - Consolidated

Bangchak Corporation Plc.

18 Unit: THB Million Current Liabilities Long Term Debt Total Equity Other Non Current Liabilities

(Including current portion of L/T debt)

49,538 49,875 3,083 3,062 45,460 45,228 7,603 6,075 6,680 12,978 5,004 4,797 31 DEC 18 31 MAR 19

Liabilities & Equity

31 Dec 18 31 Mar 19 30,896 31,374 48,877 49,977 3,680 2,940 15,135 19,600 6,969 7,856 11,813 10,268 31 DEC 18 31 MAR 19 Cash and Equivalents & Short term Investment Other Current Assets Inventory PP&E Other Non Current Assets

117,369

Assets

31 Dec 18 31 Mar 19 Account Receivable

122,016

Account Payable Short term loan

117,369 122,016

Financial Position - Consolidated

Bangchak Corporation Plc.

19 3,680 2,940 15,135 19,600 6,969 7,856 11,813 10,268

 Inventory 4,465 MB mainly from inventory volume increase  Account Receivables 887 MB

• mainly from higher oil product sales volume of BCPT in Mar’19

compared to Dec’18 Cash and Equivalents & Short term Investment Other Current Assets Inventory 40,665

Current Assets

31 Dec 18 31 Mar 19 Account Receivable 37,596

7,603 6,075 6,680 12,978 5,004 4,797 31 DEC 18 31 MAR 19

31 Dec 18 31 Mar 19 23,851 19,288 Other Current Liabilities Account Payable Short term loan

Current Liabilities

 Account Payable 6,298 MB mainly from higher crude oil purchase volume

• f Bangchak refinery and higher oil product trading transactions of BCPT

 Other Current Liabilities 1,528 MB Decreased mainly from

• Excise tax and oil fund expense payable decreased by 847 MB
• Other payables decreased by 646 MB (mainly from accrued expenses 533 MB)

 Short term loan mainly from BCP 3,195 MB (100 MUSD) and BBGI 1,352 MB

31 Dec 18 31 Mar 19 Crude

• Vol. 3.2 MBBL
• Vol. 4.7 MBBL

Product

• Vol. 281 ML
• Vol. 320 ML

Financial Position - Consolidated

Bangchak Corporation Plc.

20 30,896 31,374 48,877 49,977

 PP&E 1,100 MB

• Increased mainly from refinery and power plant assets 2,058 MB
• Depreciation for Q1/2019 of 1,093 MB

PP&E Other Non Current Assets 81,351 Non-Current Assets 31 Dec 18 31 Mar 19 79,773

3,083 3,062 45,460 45,228 31 DEC 18 31 MAR 19

31 Dec 18 31 Mar 19 49,875 49,538 Long Term Debt Other Non Current Liabilities

(Including current portion of L/T debt)

 Long-term debt 232 MB

• Decreased as Long-term loans from financial institutions 234 MB

Non-Current Liabilities  Other Non Current Assets 478 MB

• Increased mainly from Other long-term investments
• Change in net fair value of available-for-sale investment (LAC) 267 MB
• Investment in new start up 95 MB
• Long-term loans to related parties
• Loan to LAC 414 MB

Financial Position - Consolidated

Bangchak Corporation Plc.

21 6,823 6,987 27,607 27,783 15,273 15,274 31 DEC 18 31 MAR 19

 Equities increased 338 MB (+1% YoY) mainly from

• Retained Earnings
• Q1/2019 Net Profit of 395 MB
• Other component of equity
• Net fair value change in available-for-sale investment (LAC)

increased by 267 MB

• Loss in foreign currency conversion of financial statement 271 MB
• Effect from IFRS15

Equity: Retained Earnings 38 MB Non-controlling interests 16 MB

Equity

31 Dec 18 31 Mar 19 49,538 49,875 Other Components Non-Controlling Interests Retained Earnings Paid up capital, Share premium and capital surplus

• 169
• 165

Cash Flow - Consolidated

Bangchak Corporation Plc.

Beginning Cash 11,551 MB Change in Cash

• 1,376 MB

Ending Cash 10,036 MB FX adjustment

• 139 MB

Q1/2019 Sources and Uses of Cash

Unit: THB Million

22

1,193 279 884 36 2,154 844 570 120

Cash From Operation Funding

2,353

Sources of Cash Uses of Cash

3,728

Change in Working Capital Debt Service - Repayment Investment in PPE Tax Paid Selling of PPE, Selling of investments and others Investment in intangible assets and others

Table of Content

Q1/19 Financial Performance

02

Business Updates

03

Appendices

04

Q1/19 Performance Update

01

Refinery Business Group – Refinery Upgrading Project Updates

Bangchak Corporation Plc.

24

Status Progress Expected Completion

Continuous Catalyst Regeneration Unit (CCR)

(CCR: Higher Capacity & maintenance cycle extension)

• Construction

71% 2020

Debottlenecking #1: Hydrocracker Unit (HCU) Revamping

(Higher Optimal Crude Run: Distillate)

• Construction

71% 2020

#2: Debottlenecking CDU & NPU & ISOU & KTU

(Higher Optimal Crude Run: Light & Middle Distillate)

• Still yet to be decide whether to divide into

smaller improvement projects On hold On hold

3E Project Updates

Overall CCR Construction Area Piling work

Marketing Business Group – 2019 Highlight

Bangchak Corporation Plc.

25

Continue to increase market share in Retail Sales 2019 Network Expansion

+70

New Stations Mostly Standard size Non-oil (BCR)

Supporting business 2019 Target

SPAR: +20 stores Inthanin: +200 stores

+65 Standard +5 COOP

#Diesel B20 Alternative fuel for better environment #GDI technology fuel in Thailand #Hi Premium diesel & E20 EURO5 standard

#Green Experience #Green Coffee #Green Campaign #บริการมาตรฐานด ้ วยความใส่ใจ #บางจากมากกว่าสถานีบริการ

Bio-Based Products Business – On-going projects updates

Bangchak Corporation Plc.

26

KGI-NP II Ethanol

66 ML/Yr

200,000 L/D Expected COD 2H/20 BBF Biodiesel

330 ML/Yr

1,000,000 L/D Expected Q3/19 Additional plant

Kanchanaburi Khonkaen Ayudhaya Chachoengsao Bangkok

KGI-NP I Ethanol

49.5 ML/Yr

150,000 L/D BBGI holds 100% BBF Biodiesel

290 ML/Yr

930,000 L/D BBGI holds 70% KGI-BP Ethanol

99 ML/Yr

300,000 L/D BBGI holds 100%

Ubonratchathani

UBE Ethanol

120 ML/Yr

400,000 L/D (Associated company)

BBE Ethanol

45 ML/Yr

150,000 L/D BBGI holds 85%

+

Capacity increment in existing plant Additional plant Glycerin

28,000 Ton/Yr

Expected COD 2H/20

IPO plan to be in 2020 currently waiting for clarification in high value bio-based investment projects

OKEA – 2019 Highlight

Bangchak Corporation Plc.

27

OKEA prepares for drilling operation to target further upside potential within and surrounding the Draugen field

• The drilling operation is expected to commence in Q4/19
• The project aims to enhanced oil recovery and prolonged

production from the Draugen platform

• No additional fund raising needed for the drilling project
• There are several potential follow-up targets identified in the

area that might be drilled over the next years to further increase the volume in the Draugen area

20 40 60

kboe/d

Potential Production Profile (net to OKEA)

(Producing Assets) (Developing Assets) (Identified Upsides)

OKEA IPO targeted to be in June 2019 Currently in roadshow process

THANK YOU

ir@bangchak.co.th

• Tel. +662 335 4370, 4390, 8518

www.bangchak.co.th click Investor Relations

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.