Q2/2017 Opportunity Day Presentation Analyst Meeting Presentation - - PowerPoint PPT Presentation

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Analyst Meeting Presentation Q2/2017 Q2/2017 Opportunity Day Presentation

Stock Exchange of Thailand, 22 August 2017

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2 This presentation includes forward-looking statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realized from the proposals described herein. This presentation contains a number of forward-looking statements including, in particular, statements about future events, future financial performance, plans, strategies, expectations, prospects, competitive environment, regulation and supply and demand. PTTGC has based these forward-looking statements on its views with respect to future events and financial performance. Actual financial performance of the entities described herein could differ materially from that projected in the forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and financial performance may be better or worse than anticipated. Given these uncertainties, readers should not put undue reliance on any forward-looking statements. Forward-looking statements represent estimates and assumptions only as of the date that they were made. The information contained in this presentation is subject to change without notice and PTTGC does not undertake any duty to update the forward-looking statements, and the estimates and assumptions associated with them, except to the extent required by applicable laws and regulations.

Disclaimer

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Agenda Q2/2017 Financial Results Strategic Direction

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Agenda Q2/2017 Financial Results Strategic Direction

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Q2/2017 Performance

Refinery

Spread : Slightly soften

• Middle distillate spread soften from

the resume of Refinery in Western countries but offset by better FO spread. U-rate : Maintained high u-rate at 103% in Q2/2017

Aromatics

Spread : Soft to Stable

• Spread dropped as inventory of both

Benzene and Paraxylene remained high, along with downstream plant T/A and started operation at the end

• f quarter.

Olefins & Derivatives

U-rate : Declining to 66% from planned maintenance shutdown in Jun’17 Spread : Lower product price

• Decrease in Ethylene price from

lower demand against higher supply.

• MEG and Butadiene price returned

to normal level Market GRM

• GRM increased QoQ to 6.11 $/bbl due

to better FO spread and higher sales volume.

• Comparing with 1H/2016, GRM rose to

6.06 mainly from higher Diesel and FO spread. Market P2F

• P2F decreased QoQ to 212 $/ton

resulted from lower products spread and lower sales volume resulted from planned shutdown.

• Benzene spread was sharply increased

in 1H/17, drove P2F to 269$/ton in 1H/2017. U-rate : Slightly dropped to 89% from planned shutdown of OLE2/1 and Butadiene unit. % EBITDA Margin

• Declined QoQ to 27% from decline in price,

especially MEG, Butadiene, also had planned shutdown in this quarter.

• 31% EBITDA Margin in 6M/2017 as product

price in Q1/2017 was up significantly.

102% 100% 101% 99% 93% 35% 99% 103% 102% 103%

Q1/15Q2/15Q3/15Q4/15Q1/16Q2/16Q3/16Q4/16Q1/17Q2/17

88% 85% 57% 66% 90% 83% 75% 82% 78% 66%

Q1/15Q2/15Q3/15Q4/15Q1/16Q2/16Q3/16Q4/16Q1/17Q2/17

96% 89% 93% 97% 81% 85% 92% 100% 95% 89%

Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17

(Unit: USD/ton) Q2/2016 Q1/2017 Q2/2017 YoY % +/(-) QoQ % +/(-) 6M/2016 6M/2017 Condensate 394 465 431 9%

• 7%

348 448 Paraxylene-Condensate 405 420 383

• 5%
• 9%

410 402 Benzene-Condensate 234 458 338 45%

• 26%

253 398 P2F Margin 147 321 212 44%

• 34%

174 269 (Unit: USD/ton) Q2/2016 Q1/2017 Q2/2017 YoY % +/(-) QoQ % +/(-) 6M/2016 6M/2017 Ethylene (SEA) 1,099 1,090 990

• 10%
• 9%

1,056 1,040 HDPE 1,153 1,176 1,133

• 2%
• 4%

1,128 1,154 MEG (ACP) 820 1,078 940 15%

• 13%

776 1,009 Butadiene 990 2,545 1,094 11%

• 57%

927 1,820 %EBITDA Margin 24% 35% 27% 3%

• 8%

22% 31% (Unit: USD/bbl) Q2/2016 Q1/2017 Q2/2017 YoY % +/(-) QoQ % +/(-) 6M/2016 6M/2017 Dubai Crude Oil 43.18 53.12 49.77 15%

• 6%

36.82 51.44 Gasoline-Dubai 14.45 14.78 14.21

• 2%
• 4%

16.63 14.50 Jet-Dubai 11.15 11.32 10.81

• 3%
• 5%

11.36 11.07 Diesel-Dubai 10.51 11.83 11.38 8%

• 4%

10.07 11.60 Fuel Oil-Dubai

• 8.76
• 3.14
• 1.85

79% 41%

• 6.97
• 2.49

Market GRM 4.57 6.02 6.11 34% 1% 5.27 6.06

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% Adj. EBITDA Margin Q2/2016 Q1/2017 Q2/2017 6M/2016 6M/2017 Business Unit : Refinery 3 6 6 6 6 Aromatics 7 22 11 10 17 Olefins and Derivative 24 35 27 22 31 Green 10 7 5 9 6 HVS (1) 6 5 (2) 6 Average 12 17 13 12 15

Overview of Business Unit’s Performance

Sales revenue Adjusted EBITDA

Adjusted EBITDA increased by 61% YoY but dropped 30% QoQ, from planned shutdown of Aromatics 2 and Olefins business, along with soften product spread in this quarter.

Q2/2017 Q2/2017 Q2/2016 Q2/2016 (Unit: Million Baht) Q2/2016 Q1/2017 Q2/2017 YoY % +/(-) QoQ % +/(-) 6M/2016 6M/2017 YoY % +/(-) Sales Revenue 65,543 107,149 100,772 54%

• 6%

146,307 207,920 42% EBITDA 10,119 18,616 11,640 15%

• 37%

19,634 30,256 54% EBITDA Margin (%) 15% 17% 12%

• 25%
• 34%

13% 15% 8% Net Profit 4,924 13,182 6,603 34%

• 50%

9,632 19,785 105% EPS (Baht/Share) 1.10 2.96 1.48 34%

• 50%

2.16 4.44 105% Adjusted EBITDA* 7,938 18,108 12,744 61%

• 30%

17,727 30,852 74% Adjusted EBITDA Margin (%) 12% 17% 13% 1%

• 4%

12% 15% 3%

Note: * Adjusted EBITDA refers EBITDA excluding impact of oil stock value

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Performance Q2/2016 VS Q2/2017

• Overall operating profit in Q2/17 was higher than Q2/16, mainly from higher sales volume from

Refinery business as it was shut in Q2/16 for T/A period, supported with better product price and spread especially MEG and Benzene as a result of better demand from Polyester and Styrene Monomer respectively.

• Stock Gain(Loss)&NRV& Commodity Hedge in Q2/17 was loss of 1,089 MB since Dubai decreased

whereas Q2/16 was gain of 2,181 MB .

• FX Gain(loss) in Q2/17 was gain of 275 MB against FX gain in Q2/16 of 101 MB due to baht

appreciation in Q2/17 was higher than Q2/16

Q2/16 Q2/17

Stock Gain & NRV&Commodity Hedge Q2/17 = (1,089) Q2/16 = 2,181 FX Q2/17 = 275 Q2/16 = 102 Unit : Baht MB Operating Profit from BAU Project MAX Q2/17 = 581 Q2/16 = N/A

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Performance Q1/2017 VS Q2/2017

Q1/17 Q2/17

Stock Gain & NRV&Commodity Hedge Q2/17 = (1,089) Q1/17 = 519 FX Q2/17 = 275 Q1/17 = 1,529 Unit : Baht MB Project MAX Q2/17 = 581 Q1/17 = 652 Operating Profit from BAU

• Overall operating profit in Q2/17 was lower than Q1/17, mainly from decreasing in product price

and spread especially Ethylene and Butadiene, along with lower sales volume from planned shutdown of Aromatics 2, Olefins 2/1 and Butadiene unit.

• Stock Gain(Loss)& NRV & Commodity Hedge in Q2/17 was loss of 1,089 MB since Dubai decreased

to 49.8 $/bbl while Q1/17 was gain of 519 MB as Dubai price in that quarter was higher.

• FX Gain(loss) in Q2/17 was gain of 275 MB whereas FX gain in Q1/17 was higher at 1,528 MB

due to baht appreciation in Q2/17 lower than Q1/17.

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Performance 1H/2016 VS 1H/2017

• Overall operating profit in 1H/17 was higher than 1H/16, mainly from an increase in sales volume
• f polymer and refinery, improved from last year’s turnaround.
• Stock Gain(Loss) & NRV & Commodity Hedge in 1H/17 was loss of 570 MB since Dubai decreased

while 1H/16 was gain of 1,950 MB

• FX Gain(loss) in 1H/17 was gain of 1,804 MB against FX gain in 1H/16 of 734 MB due to baht

appreciation in 1H/17 more than in H1/16.

1H/16 1H/17

Stock Gain & NRV&Commodity Hedge 1H/17 = (570) 1H/16 = 1,950 FX 1H/17 = 1,804 1H/16 = 734

• refinery, improved from last year’s turnaround.
• H1’17

Unit : Baht MB Project MAX 1H/17 = 1,233 1H/16 =N/A Operating Profit from BAU Other

1,233

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Agenda Q2/2017 Financial Results Strategic Direction

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Recent Developments

June 20th, 2017 PTTGC signed MoU with Nanyang Technological University (NTU) to Co-develop advanced 3D printing materials and applications for auto industry. June 7th, 2017 Kuraray – Sumitomo Corp – PTTGC signed key term JVA for production and sales of engineering plastic, High Heat Resistant Polyamide-9T and thermo plastic HSBC in Thailand. PTTGC is to issue up to 10,000 MB bond with coupon rate of 3.05%. The purpose is to refinance debt and to finance future investment

Specialty Chemical : PA-9T & HSBC MoU for Advanced 3D Printing Issuing 10,000 M.Baht Bond

Aug 17th, 2017 The purpose of the joint venture is to produce and sale of plastic bag in Republic of the Union of Myanmar

Signed SHA for investing in Myanmar

Continuing realize benefit by 581 MB in Q2/17 and by 1,233 MB in 1H/17.

MAX Benefit Realization

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Asset Injection

Asset injection’s transaction has completed in July 3rd with final transaction value of 25,061 MB.

• Fill the missing link and lengthen value chain to

capture margin of existing feedstock

• Utilize excess steam volume from new asset within

PTTGC facilities

• Share best practice of technical know-how on PDH

unit.

Potential Integration

*Note : Include Shareholder Loan 9,189 MB

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13 GC Oxirane Co., Ltd PO 200 KTA

PO 108 KTA

Propylene

GC Polyols Co., Ltd Polyols 130 KTA & System Product 36 KTA

Technology:

EO

PO (Captive) 92 KTA Polyols 106 KTA

Polyols Plant

System 36 KTA

System House

Polyols 24 KTA Plant Location: Hemaraj MTP, Rayong Plant Location: Hemaraj MTP, Rayong

PO/Polyols Project

Cumene

Propylene Oxide Polyols & System Product Company GC Oxirane Co., Ltd GC Polyols Co.,Ltd Shareholder PTTGC 100% PTTGC Sanyo Chemical Toyota Tsusho CAPEX ~888 M$ or ~32,000 MB FID / COD Aug 2017 / 2020 Aug 2017 / 2020

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14 39% 30% 17% 10% 2% 2%

Supply chain optimization Penetrates high margin territory Operation optimization Procurement improvement Utility cost saving Operating cost saving

1H/2017 MAX Benefit Total 1,233 MB

652 652 581 581 Q1/17 Q2/17 Q3/17 Q4/17

FY 17 ~ 3,200 MB

Growing MAX Benefit

MAX Project : Continuous Benefit

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15 2017 2018 2020 2019 mLLDPE (434 KTA) PO/Polyols (330 KTA) MTP Retrofit (750 KTA) ME Plant 2 (200 KTA) HDI Derivative Thailand (12 KTA) Asset Injection (1,200 KTA)

Consistent Volume Growth

mLLDPE ME Plant 2 PO/Polyol MTP Retrofit

(Olefins Reconfiguration)

Capacity @ 100% mLLDP 400 KTA Hexane-1 : 34 KTA Methyl Ester 200 KTA PO 200 KTA Polyol 130 KTA Ethylene 500 KTA Propylene 250 KTA CAPEX 288 MUSD 47 MUSD 888 MUSD TBA Timeline Project Progress 87% Project Progress 66% Drafting Engineering Details COD

2018 2018 2020 2020

~ 8,000 MB

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Performance Outlook

Expected 2017 Dubai to average at 50 $/bbl. Refinery CDU U-rate running at full through out the year. GRM is expected to slightly improve in 2H but FY is expected to improve YoY. Aromatic U-rate recover in 2H from less maintenance

• downtime. BTX margin soften in 2H but FY will be

improved YoY. Olefins U-rate maintain at high rate. Ethane flow remain steady at 270 t/h PE is operating at maximum rate with some shutdowns. HDPE price to average at 1,135 $/ton in 2017 MEG U-rate expects to run at full capacity in 2H as there is no S/D.

2016  2017 U rate 83%  102% GRM $5.3  $6.3 U rate 84%  79% P2F $185  $260 U rate 90%  96% U rate 102%113% U rate 95%  95%

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For further information & enquiries, please contact our Investor Relations Team at IR@pttgcgroup.com

Thank You

1 Thitipong Jurapornsiridee VP-Corporate Finance & IR Thitipong.j@pttgcgroup.com +662-265-8574 2 Jittasak Soonthornpan IR Manager Jittasak.s@pttgcgroup.com +662-265-8172 3 Prang Chudasring IR Senior Analyst Prang.c@pttgcgroup.com +662-265-8327 4 Nattchanon Chawinsittangkul IR Analyst Nattchanon.c@pttgcgroup.com +662-265-8364 5 Pantaree Nantanakom IR Analyst Pantaree.n@pttgcgroup.com +662-140-8714