Delay will affect refiner's profits

An analyst at Asia Plus Securities said the brokerage might revise the 2009 earnings forecast for Bangchak downwards, because the project is considered a major factor in improving the company's business outlook next year. PQI will improve the quality of Bangchak's production process from a simple to a complex refinery.

"Bangchak's refining margin, if improved from simple to complex, will be similar to Thai Oil and PTT Aromatics and Refining, which will make the company more profitable next year," the analyst said.

According to Bangchak's executives yesterday, the project will be finished next year, leading Asia Plus to believe it might revise down the growth of Bangchak's revenue again. Bangchak previously told securities houses that the PQI project would be operating at the end of this year.

"If the plan has been delayed to the second quarter next year, this might affect the revenue significantly, because the PQI project will boost the refining capacity to 100,000 barrels per day from the current 65,000 barrels," the analyst said.

The analyst added that the Bt28.98-billion refinancing loan signed yesterday with six banks would not have a negative effect on the company's balance sheet because Bangchak's debt at the moment is not huge.

The company has long-term debt of about Bt9 billion and short-term debt of around Bt880 million. The company has attempted to lower interest expenses by refinancing its former loans and the deal has reduced the interest rate by one to two percentage points.

Asia Plus Securities house forecasts that the refinancing loan will increase the debt-to-earnings ratio to 1.5 times from its current 1.12 times. However, the broker still recommends a "buy" rating on Bangchak Petroleum stock.

The stock yesterday closed at Bt11.50, down 20 satang.