IRPC Pcl (IRPC), Thailand’s fourth-biggest petrochemical company, plans to spend $1 billion to expand capacity and develop land for industrial use amid a push to double earnings in the next three years.
A new petrochemical plant, which will begin operating in 2015, will boost propylene production by about 80 percent, President Atikom Terbsiri said in an interview at his office yesterday. The company will also begin selling about 988 acres of land in Rayong province for manufacturers in 2013, he said.
IRPC joins affiliate PTT Global Chemical Pcl (PTTGC) and rival Siam Cement Pcl (SCC) in expanding production of petrochemical products as rising sales of automobiles, home appliances and electronics in Thailand and elsewhere in the region increase demand for plastic products. New factory and land sales will help double earnings before interest, taxes, depreciation and amortization, a measure of cash flow known as Ebitda, in 2015 from about $300 million a year, according to Atikom.
“Increased production of premium petrochemical products will strengthen the company’s competitiveness and profit margins,” Atikom said. “Industrial land development also allows the company to boost earnings growth even as the business is new and challenging.”
The shares have gained 1.5 percent this year, trailing a 26 percent advance in the benchmark SET Index. (SET) The stock has 10 buy, eight hold, and five sell ratings, with an average price target of 4.29 baht, according to a Bloomberg survey of analysts.
Solar, Wind Power
IRPC, controlled by PTT Pcl (PTT), operates its own refinery with a capacity of 215,000 barrels per day, according to the company’s website. The company reported a net loss of 4.06 billion baht ($132 million) in the second quarter ended June 30, compared with profit of 2.34 billion baht a year earlier, as declining oil and petrochemical product prices cut inventory values, according to a company statement on July 27.
“IRPC’s focus on premium products will only help its earnings to some extent because economic slowdown in Europe and China has significantly depressed petrochemical prices,” Songklod Wongchai, an analyst at Finansia Syrus Securities Pcl (FSS), said by phone today. “Property development business is an encouraging trend because the company carries vast areas of undeveloped land on its books.”
IRPC has about 3,500 acres of land in Rayong and southern Songkhla province that the company aims to develop into earnings sources, said Atikom. The company is studying the possibility of setting up solar and wind power plants on its land in Songkhla province, 950 kilometers (595 miles) south of Bangkok, he said.
The company will also spend $250 million to build power plants with total generating capacity of 180 megawatts in Rayong province, 185 kilometers east of Bangkok. The plants will sell electricity to the state utility, he said.
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