TRIS Rating Co., Ltd. has upgraded the company rating of The Bangchak Petroleum PLC (BCP) to “A-” with “stable” outlook from “BBB+” with “positive” outlook. The upgrade reflects BCP’s strengthening business profile following the successful transformation to a complex refinery and increasing market share in oil marketing business as a result of its strategic direction toward renewable energy. The rating also reflects the company’s business integration and support from PTT PLC (PTT) and its diversification into energy-related business. The rating also takes into consideration the fluctuations in oil prices and gross refining margins (GRM). The “stable” outlook reflects an expectation that new cracking unit will alleviate BCP’s refinery limitations and yield more high-value refined products. The company is also expected to sustain its retail market position. The investment in solar power project will generate a reliable stream of income and partially offset the fluctuations in the refinery business.
TRIS Rating reported that BCP was established in 1985 and listed on the Stock Exchange of Thailand (SET) in 1993. The company owns and operates an oil refinery located in Bangkok with a capacity of 120 thousand barrels per day (KBD). The company also operates approximately 1,000 service stations under the “Bangchak” brand. After a capital increase in May 2006, PTT became the major shareholder of BCP. As of September 2010, PTT held 28.3% of BCP, the Ministry of Finance (MOF) held 10.6%, and the remaining 61.1% was held by the public.
TRIS Rating said, BCP’s refinery was fully transformed into a complex refinery after commencing operation of the hydro-cracking unit in December 2009. With the new hydro-cracking unit, BCP’s refinery is able to process more varieties of crude, especially heavy and sour crude, as well as yielding more valuable products. Currently, the product mix is diesel (53%), gasoline (18%), fuel oil (15%) and jet fuel (10%), compared with 36% diesel, 15% gasoline, 33% fuel oil and 11% jet fuel before upgrading the refinery. During the first half of 2010, BCP’s base GRM increased to US$5.48 per barrel. Crude intake also increased from 79.2 KBD in 2009 to 83.4 KBD in the first half of 2010. The company expects its refinery utilization to reach 80% in the coming year from the historical level of 50%-60%.
BCP’s sales volume through its marketing arm continuously improved, increasing from 251 million liters per month (ML/MO) in 2007 to 324 ML/MO in the first half of 2010. According to Department of Energy Business (DOEB), BCP’s sales volume through its service stations decreased by 3% year-on-year (y-o-y) to 191 ML/MO, better than the 5% decline (y-o-y) for the market. During the first half of 2010, BCP was ranked the third largest in oil retailing through service stations, and its market share improved to 13.9%.
Combining the refining and marketing businesses, TRIS Rating said that BCP’s earnings before interest, tax, depreciation and amortization (EBITDA) was Bt2,787 million in the first half of 2010. BCP’s capital structure remained satisfactory, with a debt to capitalization ratio of 38.3% as of June 2010. The capital expenditures for new projects between 2010 and 2013 are Bt6,450 million. The new projects consist of solar power project, the gasoline improvement project to meet the EURO IV specification, and tail gas treatment project.
At the same time, TRIS Rating has affirmed the “AA” rating with “stable” outlook for Bt4,000 million in depository receipts on BCP’s subordinated convertible debentures (BCP141A) issued by Siam DR Co., Ltd. (SIAMDR). The rating reflects the credit support, in terms of principal protection, provided by the MOF to buy back the issue at the original offering price should BCP be unable to make the scheduled payments on time. The rating also reflects the additional security elements embedded in the transaction structure and the credit quality of the underlying issuer, BCP. The “stable” outlook for SIAMDR’s depository receipts on BCP’s convertible debentures is derived from the principal protection provided by the MOF and the credit quality of BCP. — End
Company Rating: Upgraded to A- from BBB+ Rating Outlook: Stable Siam DR Co., Ltd. (SIAMDR) Issue Rating: BCP141A: Bt4,000 million depository receipts on The Bangchak Affirmed at AA Petroleum PLC’s subordinated convertible debentures due 2014 Rating Outlook: Stable
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