TRIS Rating Co., Ltd. has assigned the rating of “A-” to the proposed issue of up to Bt3,000 million in senior debentures of Bangchak Petroleum PLC (BCP). At the same time, TRIS Rating has affirmed the company rating of BCP at “A-”. The outlook remains “stable”. The proceeds from the debentures will be used for the company’s renewable projects and for working capital. The ratings reflect the company’s proven record of its refinery, the integration of the refining and marketing businesses, its diversification into other energy-related businesses, and the support from PTT PLC (PTT). The ratings also take into consideration the fluctuations in oil prices and gross refining margins (GRM), the weakening global economy, and the uncertainty of government policies regarding the energy sector. The “stable” outlook reflects the expectation that BCP will maintain its refinery and market positions in the oil business in Thailand. The investments in the solar power project will generate reliable streams of income and partially offset the fluctuations in the refining segment.
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 December 2011, PTT held 27.2% of BCP, the Ministry of Finance (MOF) held 10.0%, and the remaining 62.8% was held by the public.
TRIS Rating said, BCP’s refinery is categorized as a complex refinery since commencing the hydrocracking unit in December 2009. As a complex refinery, BCP is able to process a variety of crude oils, especially heavy and sour crude. The complex refinery also yields high proportions of valuable products. In 2011, the company’s product mix was diesel (52%), gasoline (23%), jet fuel (13%), and fuel oil (12%). Refinery operations for 2011 were satisfactory. The crude intake slightly fell to 85.7 KBD in 2011, from 86.0 KBD in 2010. The reduction was mainly due to a 32-day shut down for major turnaround in February and March 2011. BCP’s base gross GRM rose to US$6.71 per barrel in 2011 from US$5.63 per barrel in 2010, mainly due to favorable market condition plus a flexible plant configuration.
BCP’s sales volume through its marketing arm continually improved, increasing from 297 million liters per month (ML/MO) in 2009 to 327 ML/MO in 2010, and 350 ML/MO in 2011. BCP has maintained its rank as the third-largest oil retailer through its service stations, with a market share of 13.4% in 2011.
BCP’s solar power project, with total capacity of 38 megawatts (MWs), are located in Bang Pa-in district, Ayudhya province. The severe flood in late 2011 damaged the company’s solar power assets. The total cost of damage is estimated at Bt2,600 million. The first phase of the solar power project (8 MW), commencing commercial operation in August 2011, had suspended operation since 16 October 2011 due to the flood. The damage to the first phase is estimated at Bt600 million, which will be covered by BCP’s property damage and business interruption insurance. The damage to the second phase (30 MW) is estimated at Bt2,000 million. The damage to the second phase will be the responsibility of the project construction contractors, as this phase is still under construction. The damage will be covered by contractor’s insurances policies. Currently, the first phase of the solar power project resumed operation on 2 April 2012. BCP expects to commence commercial operation of the second phase within July 2012.
BCP’s financial profile was satisfactory. BCP’s total revenue for 2011 operation increased by 16.3% to Bt158,610 million, mainly from an increase in oil prices plus a rise in sales volume through its marketing business. The company’s profitability also improved with the operating margin (before depreciation and amortization) increased from 3.5% in 2010 to 5.6% in 2011. Its capital structure remained satisfactory, with a debt to capitalization ratio of 38.3% as of December 2011. BCP’s capital expenditures for new projects between 2011 and 2015 are budgeted at Bt20,000 million, mainly for the solar power project. With the earnings before interest, tax, depreciation, and amortization (EBITDA) expected to be Bt5,000-Bt8,000 million per year, BCP’s leverage may increase slightly during the development period of the power projects, said TRIS Rating. — End
Company Rating: Affirmed at A- Issue Rating: Up to Bt3,000 million senior debentures due within 2022 A- Rating Outlook: Stable
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