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RESOURCES & INDUSTRY
Energy sector gains on average
Banpu Plc puts high five-year returns down to building up assets through joint ventures in new businesses
By SOONRUTH BUNYAMANEE
Above-market-average returns for shareholders of energy stocks have been recorded for each timescale documented by the Shareholder Scorecard. In terms of five-year return, Banpu Plc (BANPU) let with 63.2%, compared with the sector's 40.8% average. Siam United Service Plc (SUSCO) had the lowest five-year TSR with 14.7%.
 Banpu CEO Chanin Vongkusolkit says his company has delivered shareholder value by building up assets. It has focused on acquiring or entering into joint ventures in new or related businesses.
``More importantly, Banpu will invest in what is proficient, particularly, energyrelated businesses,'' he said.
The high returns formed part of Banpu's strategic plan to raise long-term corporate value by attracting investors. They were also attributed to the increasing demand and price of coal for the regional miner and energy operator in 2005.
Also helping was Banpu's sale of shares in The Aromatics Thailand Plc (ATC) for a high profit, using the earnings to expand core business, said an analyst.
Banpu invested in ATC through a debtto-equity conversion by purchasing 167.95 million shares, or 20% of ATC, at 3.50 baht per share in 2001. ATC's share price peaked at almost 75 baht in 2004. Today, Banpu holds 3.57% in the company.
PTT Plc recorded the highest threeyear TSR with 82.1%, compared with a sector average of 69.1%.
Bangchak Petroleum has delivered lower returns because it doesn't have a cracking unit to transform fuel oil into higher-value products. |
PTT president Prasert Bunsumpun said that PTT had spent the past three years restructuring its businesses and finances.
The company and its consolidated subsidiaries had issued several financial instruments, including debentures, for refinancing, reducing financial costs and better credit ratings.
PTT companies shared resources and investment which reduced costs and lifted competitiveness. Group expansion focused on synergy and streamlining for higher capacity at lower investment cost.
For example, PTT divested its interests in Thai Lube Base Plc and Thai Paraxylene Ltd to Thai Oil Plc (TOP), because the three firms would work well together and contribute high earnings to the group.
Mr Prasert, however, said that a major reason for PTT's spectacular earnings and shareholder returns was the cyclicalBangchak Petroleum has delivered lower returns because it doesn't have a cracking unit to transform fuel oil into higher-value products.uptrend of oil and petrochemical prices in the world market.
``Although the cyclical downturn has begun, the prices will stay high for years. During this period, what the company must do is to carefully expand group production capacity, particularly in valueadded products in petrochemicals. Despite decreasing margins during the downturn, the larger business base will help the company maintain its earnings before interest, tax, depreciation, and amortisation sustainably in the long run,'' said Mr Prasert.
Bangchak Petroleum Plc (BCP) offered a 26.1% five-year TSR and a 48.9% threeyear return, below the sector averages of 40.8% and 69.1% respectively, despite the cyclical uptrend of oil prices.
According to Bangchak president Anusorn Sangnimnuan, the below-average returns were mainly because the company didn't have a cracking unit to transform fuel oil into higher-value products such as petrol and diesel.
Unlike other local oil refineries that have been reaping high profits from increasing oil prices, particularly petrol and diesel, Bangchak has produced fuel oil at 30% of its total refining capacity.
While the refining margin of other oil refineries is now at US$20 per barrel, Bangchak's is only $10-12.
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