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BANGCHAK CORPORATION PCL.ANALYST MEETINGQ2/2020
August 19, 2020
2
01
02
03
Q2/2020Key Highlight
TABLE OF CONTENT
Q2/2020Business & Financial Performance
Business Outlook
3
115.5 114.8
100.5
113.2110.8
114.0113.1
105.5
94.3
79.180.5
108.6
50
60
70
80
90
100
110
120
130
140
Jan Feb Mar Apr May Jun
129
137 134
138
127 129
134 134
112
98
115 110
BCP Product Demand is Recovering but still below pre-COVID level due to none Jet Demand
-20
-10
0
10
Jan Feb Mar Apr May Jun
-20
-15
-10
-5
0Jan Feb Mar Apr May Jun
The Worst is Behind Us…
Private Investment Index (PII)
Private Consumption Index (PCI)
Source: Bank of Thailand
Source: Bank of Thailand
%
%
BCP Total Sales
Crude Run
Unit: KBD2019 2020
Cut as demand collapsed: led by JET demand
8 Feb Airlines suspended China flights
21 Mar: Thailand started lockdown
3 Apr: Nationwide night curfew started
3 & 7 May: Lockdown eased
4
Q2/2020 Key Highlight• The COVID-19 outbreak is causing widespread impact across the globe
• Economic activities slowed down has caused demand of oil consumption to decline with significance, especially Jet fuel
• The fluctuation of oil price and weakened cracks spread due to the unexpected collapse of OPEC+ alliance and the COVID-19 pandemic
Crude oil price
Market GRM: Singapore VS BCP
5
o Adjusted production to the optimal level of 74% utilization rate
o S/D plant#2, to take advantage of lower demand, and so that TAM could be moved to 2021
o Delayed 3E project completion as foreign technical specialists could not get into the country
Refinery
Marketing
o Retail sales slumped due to lockdown in April to May
o Launched Gasohol S EVO family
o Redesigned non-oil business model
Natural Resources (E&P)
o Share of profit from OKEA below expected due low oil & gas price
o OKEA: shifted Draugen turnaround from Q3 to Q2
o OKEA: as a key promoter for the change in Norway petroleum tax regime
Power Plant
o 1st quarter fully realized performance of Nam San 3B hydropower plant
o Sold industrial graded ethanol 8.5 ML (27% of national sales) for alcohol gel and other disinfectant products
Bio-based
Q2/2020 Key Highlight
6
BCP Group PERFORMANCE (Consolidated)
o Q2 result excluding extraordinary items was profitable of 447 MB
6
Refinery-785
Refinery-3,375
Marketing725
Marketing806
Power Plant863
Power Plant1,633
Bio-based339
Bio-based848
Natural Resources60
Natural Resources
-1,166
Others-71
Others-161
Q2/20 1H/20
1,131-1,415
Net Profit (MB)
Accounting EBITDA (MB)
-1,911 -6,571
Inventory Loss(Net NRV)
AssetImpairment
TFRS9Impairment
Tax effect
Core Profit
Net Profit
447
77
What We Have Done So Far?
CAPEX Adjustment 20% Saving cash in 2020
Turnaround Postponed to 2021: +1,100 MB Subsidiary’s project postponed: +5,500 MB
Reevaluate and adjust BCP Group OPEX & CAPEX
o Cut, delay, or postpone low priority projects
o Follow the principles of law and must give utmost regard to safety
OPEX cut 20% from the original budget1H2020 OPEX saving ~1,400 MB from the original budget
Saving cash ~560 MB YoY
Note: OPEX = Operating cost and SG&A
7
8
01
02
03
Q2/2020Key Highlight
TABLE OF CONTENT
Q2/2020Business & Financial Performance
Business Outlook
9
BCP Group EBITDA Q2/2020 EBITDA 1,131 MBOperatingEBITDA* 2,645 MB
o Crude run 89.3 KBD (74% utilization rate)
o Operating GRM increased to 3.93 $/BBL
due to lower crude premium
o COVID-19 affecting global oil demand causing
an inventory loss of 3,278 MB and NRV
reversal of 1,412 MB
Refinery & Trading
Power Plant
o Electricity sales increase +34% QoQ
o Nam San 3B has realized full operational performance
for the first time, leading Hydroelectricity sales to
increase 113% QoQ
o Share of profit of 102 MB
o Sales volumes dropped 20% QoQ from
industrial sales JET slumped
o MKM 0.90 Baht/Litre, spontaneously improved
as % of retail sale jumped
o Inventory loss of 83 MB and NRV reversal of
154 MB
Marketing
Bio-Based
Products
o New demand from industrial grade ethanol fordisinfectant products has yet against thedeclining of B100 price and fuel consumption,resulted in -34% EBITDA QoQ
Natural
Resources
o 60 MB share of profit from OKEA
o OKEA production at ~16 kboe/d
Other
Note: *excludes Inventory gain/loss and Gain/loss from FX forward contracts
10
o Q2/2020 operating GRM was increased as crude premium
decline, resulted from COVID-19 aggressive impact on global oil demand
together with Saudi Arabia lower their crude OSP
o Crude price was severely pressured as COVID-19 lessened oil demand, especially
in April in which average Dubai price was 21 $/BBL, resulted in inventory loss
of 3,278 MB and NRV reversal of 1,412 MB
o Despite lower oil transaction due to the declining oil demand but BCPT
recorded increase in gross profit attributed to the increase in value of
LSFO product group
112.7104.3
89.3
111.4
96.8
94%87%
74%
93%
81%
-50%
-30%
-10%
10%
30%
50%
70%
90%
0102030405060708090
100110120130140
Q2/19 Q1/20 Q2/20 1H/19 1H/20
4.95 2.87 3.93 4.20 3.36 (0.09)
0.26 0.001 0.001 0.14
(0.33)
(9.29)(7.15)
(0.18)
(8.29)
Q2/19 Q1/20 Q2/20 1H/19 1H/20
Operating GRM Hedging Inventory Gain/Loss
Refinery and Trading Business: Q2/2020 Operating EBITDA 869 MB (+85% QoQ)
GO/DB
UNL95/DB
IK/DB
HSFO/DB
LSFO/DB
Cra
ck S
pre
ads
($/B
BL)
GRM
Perf
orm
ance
($/B
BL)
Pro
duct
ion P
rofile
4.53 (6.16) (3.22) 4.02 (4.78)
Crude run
10%
4%
64%
19%
2%
Q2/20
LPG
Gasoline
Diesel
UCO
FO
Product Yield
-20
-15
-10
-5
0
5
10
15
20
Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20
11
Marketing Business: Q2/2020 Operating EBITDA 653 MB (-3% QoQ)
715 708
410 353
216 7
0
200
400
600
800
1,000
Q2/19 Q3/19 Q4/19 Q1/20 Q2/20
HSD
MOGAS
JET
HSD, MOFUEL & JET Sale Volume (ML)
o Fuel consumption was still under the pressure of COVID-19 control
measures. Total sales volume 20% dropped QoQ. Retail sales
volume slightly decreased by 5% QoQ while industrial sales volume
declined 57%
0.830.79
0.90
0.77
0.84
Q2/19 Q1/20 Q2/20 1H/19 1H/20
**Net MKM excludes Inventory Gain/(Loss) and NRV
Net Marketing Margin (Baht/Litre)
0
100
200
300
400
Q1/16 Q1/17 Q1/18 Q1/19 Q1/20
Retail
Industrial
Wholesale
Export
Total Sales Volume (ML/Mo)
2016 2017 2018 2019 Q2/20Q1/20
o Inventory loss of 83 MB and NRV reversal of 154 MB
o Net Marketing Margin increased 15% QoQ as the sale proportion
of retail market, which margin is considerably higher than industrial
market’s margin, increased
12
Marketing Network
15.8
%
12.2
%
12.1
%
10.2
%
4.1
% 1.9
%
1.8
%
1.7
%
15.6
%
11.3
%
11.6
%
10.0
%
4.1
% 2.1
%
2.1
%
1.6
%
6M/2019 6M/2020
Source: DOEB & BCP
Retail Sales Volume Market Share (%)
40.2
%
41.5
%
service stations as of Jun 2020
1,212
Standard Type 597 sites
COOP Type 615 sites
o 618 stores as June 2020
o SPAR is under business restructuring
13
Power Plant Business: Q2/2020 EBITDA 863 MB (+12% QoQ)
148 152 152 144 152
15 15 1515 15
158 158 158 158 158
14 14 14 14 14
114 114 114335
452 452
331
452
Q2/19 Q1/20 Q2/20 1H/19 1H/20
Solar &Wind
Solar
Geothermal
Wind
Hydro
Operating Capacity (MW PPA)
76 75 74
148 1495 3 5
9 8
3473
107
81
113
151 157
264
Q2/19 Q1/20 Q2/20 1H/19 1H/20
Laos JP TH
Electricity Sales (Million kWh)
Performance improved. Laos hydropower was the main leader,
added by higher share of profit.
Electricity sales +34% QoQ.
o Hydroelectricity sales in Laos increased 113% as entering
high season in late of Q2; in addition with Nam San 3B has realized full
results for the first time after the acquisition
o JP - solar sales increased attributed to seasonal factors
o TH - solar sales insignificantly changed, while the wind performance
decreased as it was low season
Share of profit 102 MB (+13% QoQ)
o Geothermal power plant 118 MB
o PH Wind power plant -15 MB mainly from weakening airstream
during the off-season
14
POWER PLANT BUSINESSBio-Based Product Business: Q2/2020 EBITDA 339 MB (-34% QoQ)
74
61
60
14
1
12
0
82
69
63
15
3
13
2
Q2/19 Q1/20 Q2/20 1H/19 1H/20
Production Sales
15
20
25
30
35
40
Ja
n-1
9
Ap
r-1
9
Ju
l-1
9
Oct-
19
Ja
n-2
0
Ap
r-2
0
Ju
l-2
0
Source: EPPO
2Q2020 profit was weakened from the decline in biodiesel
demand during the COVID-19
o Revenue and gross profit dropped 38% and 69% QoQ respectively by
the decrease in sales and B100 price, yet improved 6% and 80% YoY
from the comparatively higher B100 price and production cost reduction
B100 Average Price (Baht/Litre)
Biodiesel Production & Sales Volume (Million Litres) Ethanol Production & Sales Volume (Million Litres)
44 48
47
98
96
46
40 44
94
84
Q2/19 Q1/20 Q2/20 1H/19 1H/20
Production Sales
Ethanol Average Price (Baht/Litre)
20
22
24
26
Ja
n-1
9
Ap
r-1
9
Ju
l-1
9
Oct-
19
Ja
n-2
0
Ap
r-2
0
Ju
l-2
0
Source: EPPO
The outbreak brought new opportunity
o While the ethanol demand for fuel consumption decreased, industrial -
grade demand for alcohol gel and other disinfectant products pushed
ethanol price and supported sales, leading 2Q2020 revenue and gross
profit to increase 17% and 54% QoQ
15
Share of profit 60 MB from OKEA
OKEA performance:
o Total net production was reduced to 16.0 kboe/d due to planned
shutdown at Draugen and GjØa
o Significantly lower market prices, and fewer lifting from Draugen
resulted in revenue decreased
o Currency gain on bond loans due to strengthening of NOK against USD
o Impairments relate to the Yme asset under development and
Technical goodwill on Draugen and Gjøa, driven by the
strengthening of NOK against USD, increased capital expenditures estimates
for the Yme project and reduced reserve estimates for the P1 project on Gjøa
Natural Resources Business: Q2/2020 EBITDA 60 MB (+105% QoQ)
Realized Price
Source: OKEA
9.2 8.9 7.9
10.59.8
7.8
20.0 19.1
16.0
Q2/19 Q1/20 Q2/20
Ivar Assen
Gjoa
Draugen
60.7
48.4
24.94.12.7
1.4
Q2/19 Q1/20 Q2/20
Gas Price ($/MMBTU)
Liquid Price ($/boe)
Production Volume - Net to OKEA (kboe/d)
BCPR holds 46.32 % in OKEA ASA
16
Statement of Income: Consolidated
Statement of Income (Unit:MB) Q2/2019 Q1/2020 Q2/2020
Revenue 48,326 43,070 26,594
Cost of goods sold (45,738) (44,287) (26,036)
Gross Profit 2,588 (1,216) 558
Other income 108 105 187
Selling and administrative expenses (1,897) (1,763) (1,585)
Exploration and evaluation expense (0.2) - -
Gain (loss) from derivatives (1) (360) 283
Gain (loss) on foreign exchange 168 326 132
Loss from impairment of assets - (1,404) (83)
Profit (Loss) from operating activities 965 (4,311) (508)
Finance costs (421) (464) (517)
Impairment gain(loss) (TFRS9) - 5 (895)
Share of profit(loss) of associate and JV 156 (1,082) 169
Profit (Loss) before income tax expense
700 (5,852) (1,751)
Tax income (expense) (25) 1,536 26
Profit (loss) for the period 675 (4,316) (1,725)
Owners of the Company 528 (4,661) (1,911)
Non-controlling interests 147 345 185
Earnings per share (Baht per Share) 0.38 (3.49) (1.50)
Bongkot Marine Services 8 MB
Ubon Bioethanol Plc. -2 MB
Petrowind Energy Inc. -15 MB
Star Energy Group Holdings Pte. Ltd 118 MB
OKEA ASA 60 MB
169 MB
Share of Profit
Recorded asset impairments mainly from the BCR retail business
restructuring 135 MB
Recorded 895 MB impairment loss of major trade account
receivable, as client went into business rehabilitation under the
supervision of the Central Bankruptcy Court
17
52,584 54,062
37,583 48,514
3,149
2,315 15,835
11,487 11,073
4,662 7,564
18,094
31 Dec 19 30 Jun 20
Unit: MB
Assets
Statement of Financial Position
Cash & ST investments
Others Current Assets
PP&E
Inventories
Non Current Assets
139,133127,788
31 Dec 19 30 Jun 20 Change
Total Assets 127,788 139,133 9%
Total Liabilities 68,973 87,563 27%
Total Equity 58,815 51,570 12%
Cash and Cash Equivalents & ST Investments + 139%
• Mainly from Debentures Issuance of 8,000 MB
Trade and other current receivables - 58%
• Declining in trade account receivables attributed to the company and BCPT
Inventory - 27% due to the declining in crude oil and finished product
Non Current Assets +29%
Current Assets
Right-of-use assets and Leasehold rights 7,592 MB from TFRS 16 financial
standard
Goodwill and Intangible assets 2,161 MB as BCPG acquired Namsan 3B
Hydropower plant
PP&E + 3%
Investments in Refinery assets in 3E project
BCPG & BBGI additional capacity investment
Depreciation & amortization of 2,056 MB
Trade and Other Current Receivables
18
58,815 51,570
4,098 9,881
48,070
66,674
3,358
5,998
13,447
5,011
31 Dec 19 30 Jun 20
Unit: MB
Liabilities & Equities
Trade & Other Current Payables
Loans & Debentures
Equity
Current Liabilities
Non Current Liabilities
139,133127,788
Equities -12%
• Net loss of 6,042 MB
• Dividend payment of 575 MB
• Interest expense for hybrid bond 251 MB
• Other comprehensive income 285 MB
Trade & other current payables - 63% mainly from the lower crude price and
sales volume in June 2020 compared to December 2019
Non Current Liabilities + 141%
• Lease liabilities 6,128 MB under TFRS 16
Current Liabilities + 78%
• Current portion of lease liabilities 1,516 MB from TFRS 16
Loans & Debentures + 39% for liquidity management and subsidiaries’
investments
• Short-term loan 2,773 MB
• Loans from financial institutions and debentures 15,859 MB
Tenors Fixed rate (%)
2 yrs. 2.6%
7 yrs. 3.0%
10 yrs. 3.4%
8,000MB bond: issued in May
31 Dec 19 30 Jun 20 Change
Total Assets 127,788 139,133 9%
Total Liabilities 68,973 87,563 27%
Total Equity 58,815 51,570 12%
Statement of Financial Position
19
Beginning Cash7,276 MB
Ending Cash18,094 MB
FX adjustmentMB (214)
Cash movement 11,032 MB
Statement of Cash Flow
11,776
8,000
2,904
856
(714)
(4,822)
(3,759)
(3,209) Debt Service
PP&E
Investment & Loan to Subsidiaries & Asso.
Dividend paid & Others
Tax received & Others
Funding
Unit: MB
Sources of Cash23,536
Uses of Cash(12,504)
Debenture
Net cash generated from operating
20
01
02
03
Q2/2020Key Highlight
TABLE OF CONTENT
Q2/2020Business & Financial Performance
Business Outlook
What We Will Do Next? Synergy among BCP Group
21
22
Refinery Business
Improve efficiency of logistics management
Promote safety and control oil loss during the process
Signed memorandum of agreement to partner with 3 oil transporters
Smart Logistics and Inventory Management (SLIM)
2020 Estimated benefit ~460 MB
Maximize Value from current assets
Prepare for Euro V as next milestone
Identify alternative product development and new market opportunities
Exploring the Potential Growth Opportunities
TAM in Mid Q1/21 • 39 days
• Tie in with HCU
Crude run at ~ 100 KBD in 2H• Has not been able to ramp up production level due to
demand for Jet remains low • Ready!! to feed up to 110+ KBD, when the demand
rebounds
3.36
~ 4
1H/20 2H/20
Operating GRM:
($/BBL)
High product inventory
Lockdown easing
To slightly improve in 2H
22
23
0
400
800
1,200
1,600
Q1 Q2 Q3 Q4
2019
2020
• Retail sales rebounded since mid - Q2,
after reached the bottom in Apr 20
• Industrial sales is starting to increase as
the lockdown lifted, while jet sales is
likely to pick up in Q4
Sales Volume (ML)
(Exclude Jet Fuel)
Marketing Business PRODUCT BALANCE & MARGIN MANAGEMENT
• Integration with refinery to provide maximum benefits
• Push forward higher sales volume through the highest margin channel
PREMIUM PRODUCT DEVELOPMENT
• Environmentally friendly products
BCP
9.9%
Market Share
(Jan – Jun 2020)
In 1,115 stations In 888 stations
Domestic lubricant market share data From the Department of Energy Business (Petroleum trader in accordance with section 7)
23
Marketing Business N E W N O R M A L SERVICE
WITH UNIQUE EXPERIENCE
+54 Service stations in 2020
With Unique Design Service Station sites40(est. end of 2020)
• Non-oil partnership enhancement & New business model
• BCP service stations equipped with non-oil business to maximize return per space utilization
+160 Inthanin Store in 2020
“You Stay Home, We Delivery for You” campaign
actively performed and online sales doubled during COVID-19 outbreak
2424
25
BCP Group Business Update
BIODIESEL BUSINESS
+Refined Glycerin
27,000 Ton/Y(COD Q4/20)
ETHANOLBUSINESS
KGI-NP+200,000 L/D (COD Q4/21)
OKEA
Negative tax regime allows
significantly liquidity improvement
and profitable projects reassessment
Projects’ production scheduled
• P1/Gjoa will first oil in Q4/20
• Yme will first oil in 2H/21
Plan to submit IPO filling in late 2020
Investing in biotechnology and
pioneering high value bio-based product
Additional Production Capacity
Investment in RPV Energy (4 solar
plants totaling 20 MW) expects to
realize revenue from 3rd quarter
Benefit from Hydropower plants’ high
season
Benefit from sharp decrease of
interest rate
EBITDA growth target of 2020
remains at 20%
To get PPA of SWAN within 2020
LAC
Stock price jumped > 50% as Tesla’s
new ‘Terafactory’ prep underway
Aug. 18
Announced in late July
CAD/shareStock price TSX: LAC
Mark to market gain ~ 117 MCAD
25
THANK YOU
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 besubject to completion or amendment through the delivery of additional documentation. Except as otherwise provided herein, this document does not constitutean 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 describedherein; such projections, valuations and analyses may be based on subjective assessments and assumptions and may utilize one among alternativemethodologies that produce differing results; accordingly, such projections, valuations and statistical analyses are not to be viewed as facts and should not berelied upon as an accurate representation of future events. The recipient should make an independent evaluation and judgment with respect to the matterscontained herein.
[email protected]. +66 2335 8663 / 8518 / 4370www.bangchak.co.th
