SET-listed petroleum and petrochemical firm IRPC Plc expects to close an asset acquisition deal in the remaining months of 2018 after several years of contacts with various petrochemical makers.
Sukrit: Revelation by the end of this year
"At least one deal will be revealed to the public in 2018," said president Sukrit Surabotsopon. "The acquisition plan is aimed at faster growth for IRPC, which is better than starting new business development."
The deal could be for either a domestic or overseas production facility, but Mr Sukrit declined to go into detail.
He said IRPC has prepared a budget for asset acquisition of US$300-800 million. The future deal would be IRPC's biggest investment ever.
"This deal will increase IRPC's earnings before interest, tax, depreciation and amortisation [ebitda] by $50-100 million a year," Mr Sukrit said. The company's ebitda was 20.4 billion baht last year.
For the new project, the company plans to carry on with the Maximise Aromatics (MARS) project at a total cost of $1.1 billion. The scheme has been revised several times amid the global oil price collapse in 2014 and subsequent rebound.
MARS is in the process of front-end engineering design and is expected to start construction early next year.
The operation date is set for 2023.
MARS will add to production of paraxylene (PX) or commodity plastic feedstock by converting the by-product of the oil refinery process such as naphtha and toluene to a higher-priced finished product.
The project will increase annual production of PX to 1-1.3 million tonnes and of benzene to 300,000-500,000 tonnes.
MARS is part of IRPC's capital spending of 100 billion baht for expansion over the next five years.
The budget includes MARS, asset acquisitions and an R&D centre.
Mr Sukrit said the massive investment projects are aimed at increasing petrochemical yield to 27% from 17% in 2018.
In addition, IRPC announced the allocation of 3% of annual revenue for innovation.
Innovation creation will go hand-in-hand with the new R&D centre opposite the existing production facility in Rayong province.
IRPC considers itself capable of financing the large investments, as it has a debt-to-equity ratio of 0.6 and plenty of room to borrow or issue debentures.
Phillip Securities Thailand reported IRPC will gain gross integrated margin of a further $1 per barrel annually from the catalyst cooling system in order to receive low-priced crude oil. The project, costing 1.32 billion baht and starting operations next year, is 42% complete.
IRPC shares closed yesterday on the SET at 6.90 baht, down five satang, in trade worth 862 million baht.