Overseas stakes part of PTTGC's Bt200-bn plan
Five-year strategy focuses on region
PTT Global Chemical yesterday announced a five-year plan to invest nearly Bt200 billion in petrochemical projects, focusing on Indonesia, Malaysia and China.
PTTGC expects to double its revenue in the next 10 years. It will also conclude a joint venture with Pertamina for a petrochemical complex in Indonesia by this April.
Anon Sirisaengtaksin, chief executive officer of PTTGC, said the Bt200-billion investment over the next five years would be used to increase production, reduce costs, and improve production efficiency.
The company will invest between Bt40 billion and Bt50 billion to raise production capacities through de-bottlenecking in its aromatics and olefin facilities.
Anon said that the company's synergy projects with partners would be more concrete by 2014 and 2015, which by next year should improve its financial performance, especially earnings before the deduction of interest, tax and amortisation expenses (EBITA).
PTTGC has set aside an investment budget of about Bt140 billion for overseas expansion over the five-year period.
The company currently has three major investment projects overseas. The first is the joint venture with Pertamina, a state enterprise of Indonesia, to develop a petrochemical complex in that country.
The company has proposed the investment plan to the Indonesian government. Thailand, South Korea and Japan are the major candidates for this project. PTTGC is quite confident of being selected thanks to its strong expertise in petrochemical business and advanced technology, in which it does not lag behind either Korea or Japan. The joint-venture plan is expected to be concluded by March or April.
The plan for a developing petrochemical complex in Indonesia will require an investment of US$4 billion to $5 billion (about Bt120 billion to Bt150 billion). It will have initial capacity to produce about 300,000 barrels of petrochemical products a day and a million tonnes a year of plastic pallets. Currently, Indonesia needs to import 40-50 per cent of the petrochemical products it needs.
PTTGC's second overseas project is a possible joint venture with Malaysia's Petronas. The two companies signed a deal last year to explore the possibility of co-investing in the high-value-added petrochemical business in a new industrial zone in Malaysia. PTTCG might hold 20 per cent of the project, and most of its output would be for export.
The third project is in China, where it has signed a memorandum of understanding with major trader Sinochem International Corporation on a plan to set up a petrochemical plant to supply the auto-parts and construction industries. The plan will be clearer by the middle of this year.
The project will be smaller than those in Indonesia and Malaysia, with the focus on downstream investment.
PTTCG is confident that its overseas investment plan will not affect the company's cash flow. The investment will be from loans and cash flow. The company will maintain the ratio of debt to equity at not above 0.7 time from the present 0.5 time.
PTTCG earned revenue of about Bt400 billion during the first nine months of last year. It expects significant growth in net profit this year due to increased production capacity.
The company aims to double its annual revenue in next 10 years from the present Bt500 billion and increase return on investment to 14 per cent from the current 11-12 per cent.