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Bangchak Corporation Plc (BCP), one of Thailand’s leading refinery and retail gasoline operators, reported healthy profits for its operations during the 1st half of 2024, with expectations that the 2nd half of the year would see better performance.
During the 1st half of 2024, BCP reported record-high total revenue from sales and services of 293.44 billion Baht, a rise of 98% year-on-year (YoY) with earnings before interest, tax, depreciation and amortization (EBITDA) of 26.07 billion Baht (+48% YoY).
BCP said that the refinery and oil trading business group gained traction from a performance recognition of Bangchak Sriracha Refinery Corp (BSRC), which became part of the Bangchak Group since September 1, 2023. The average crude run significantly improved, attributed to Sriracha Refinery consistently achieving record-high average production capacity. This increased capacity offset a lower crude run in Phra Khanong Refinery, which underwent 27-day turnaround maintenance from May 7 until June 2, 2024.
Suppata Srisuk, sector analyst at Bualuang Securities, said in a note to clients that BCP’s refinery crude run was 230,000 barrels per day (bpd), up 94% YoY (optimization and the consolidation of BSRC, starting September 1, 2023) but down 15% quarter-on-quarter (QoQ) (a 27-day planned shutdown of the Phra Khanong refinery).
Oil Retailing Business
Bangchak, which is now the top gasoline retailer in Bangkok and nearby provinces and has a nationwide market share of about 29%, said that its marketing business, which is the gasoline retail, achieved a 2.2 billion Baht in EBITDA, a rise from 1.9 billion Baht seen in Q1 2024 and 553 million Baht in Q2 2023.
BCP said that the marketing business achieved a record-high total sales volume across all channels, reaching 6.92 billion liters and marking a growth of over 100% YoY. The company remains committed to delivering premium products and services to customers through a nationwide network of 2,214 service stations.
Bualuang’s Suppata said that the market gross refining margin (GRM) was US$2.6/barrel, down by 44% YoY and 57% QoQ (slimmer crack spreads). During the 2nd quarter marketing biz sales volume was 3.39 billion liters, up 114% YoY but down 5% QoQ; gross marketing margin was 0.89 Baht/liter, down 4% YoY (flat QoQ).
Bangchak said that as of end of June 2024 it had a market share of 28.8% of the entire country’s oil retailing against a mere 16.3% as of end of Q2 2024. BCP fully integrated its acquisition of Esso (Exxon Mobile) business earlier this year.
Looking into 2nd half of 2024, BCP says that it is looking at increasing its revenues from both the retailing and the refining business by 2% and 8-10% respectively.
CAPEX Plans
Bangchak said that it continues to remain committed to the 50 billion Baht in capital expenditure (CAPEX) and this is part of the 150 billion Baht BCP has allocated to CAPEX over the next 6-years.
Out of the 150 billion Baht, 30% would be allocated to refinery/marketing businesses and similar number would be allocated to the upstream natural resources business that BCP has been operating in.
Bualuang’s Suppata says that during Q3 2024 core profit looks set to decline YoY (lower refining biz earnings) but rise QoQ (higher refining, marketing, and power biz numbers).
He says that expectations of QoQ core earnings expansion in Q3 2024, together with the market’s favorable perceptions over the scope for growth among existing businesses and from future ventures, should support the stock price going forward.
He says that BCP currently trades at a 2024 price to book value of just 0.4x (1.3 standard deviation below its long-term mean of 1.0x) which should buffer against share price downside risk.
He has 12-month target price of 44 Baht a share.
