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The Bangchak Petroleum

Aim to become integrated power company BCP is investing in new projects, focusing on diversified powerrelated businesses in order to become an integrated power company and to reduce profit volatility and create strength in the long run. BUY

The Bangchak Petroleum Plc (BCP)

- Reduce profit volatility with business diversity

BCP’s business strategy from now on is to focus on more diversified

businesses, still power-related though, to use a benefit from business

diversity to reduce profit fluctuation in the future. At present, 85% of BCP is

a refinery business and 15% is solar power business. The company has

recently expanded its investment to upstream businesses: petroleum

exploration and production through stake purchased from Nido Petroleum

Limited and ethanol production and distribution through BCP Bioethanol

Company Limited. However, we believe BCP would announce additional

business plans in 2H14.

- Solar power plant: powerhouse in 2H14

We preliminarily maintain FY2014 earnings forecast. 1H14 net profit made

up 70% of our FY2014 earnings forecast (B500m insurance claim not

included). However, 2H14 net profit is unpredictable as a result of

extraordinary items; we are currently waiting for the clarity in 2H14 before

revising FY2014 earnings forecast. Profit in 2H14 is projected to come

mainly from solar power business; production from all three phases would

be fully recognized. Meanwhile, profit from the refinery business would stay

flat from 1H14. Though the refinery has resumed working after a shutdown,

2H14 GRM is projected to weaken from 1H14, which was a high season.

- BUY. 5%p.a. dividend yield

We derive FY2014 fair value (DCF) at B36. BUY is reiterated; its profit is

expected to grow continuously and stably, and average dividend yield can

be expected at 5%p.a.

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