PTT chemical to buy back and look further afield

"The stock price has fallen below the fundamental level. We have a lot of cash on hand, which should be used in the most efficient way. To buy back stock is a good opportunity," a management source said yesterday.

The Stock Exchange of Thailand allows listed companies to hold treasury stock worth up to 10 per cent of their paid-up capital.

"Now, the petrochemical business is in a downturn. If there's any opportunity, we're ready to buy any business that would make our own business expand and serve customers' needs. We also want to vary our income sources in order to reduce the volatility of any particular business," he said.

PTT Chemical is expected to continue generating cash flow from its business. As of March, its cash and cash-equivalent items had reached Bt24.74 billion.

The stock buy-back programme would not unsettle the company's financial status, he said, adding that its debt-servicing ability was still sound with leverage at only 0.2.

The company plans to look outside because if it focuses only on the domestic market, its profitability would not be good enough.

Investing abroad would not only expand the company's business but also its market.

However, PTT Chemical is interested mainly in joint-venture projects with foreign partners with expertise, as initiating a new project by itself would be much more costly. In the future, PTT Chemical's international business will account for 30 per cent of its revenues, while all present sales come from the domestic market.

Recently, the company bought 50 per cent of Cognis Oleochemicals Malaysia, while Sime Darby Planta-tion, the world's largest palm-oil producer, retained a 50-per-cent stake.