PTTGC keen for value-added acquisition
Deals debated with downstream firms
PTT Global Chemical Plc (PTTGC), Thailand's largest petrochemical producer, is considering yet another asset acquisition after it acquired Vinythai Plc, a polyvinyl chloride (PVC) maker, through a delisting tender offer two weeks ago.
PTTGC chief executive and president Kongkrapan Intarajang said the company is in negotiations with downstream petrochemical manufacturers that specialise in high value-added (HVA) products such as high-performance polymers, composites, and floating and adhesive materials.
These HVA downstream petrochemicals move PTTGC away from commodity-grade polymers, whose global market is highly competitive and exposed to fluctuation, he said.
The company wants to focus on materials that are strong and light that can be used as building materials for automobiles, jets and electronics.
"We are approaching many HVA makers and aim to have significant ownership in a new asset by the end of the year," Mr Kongkrapan said.
He said the company will pay for the acquisition with capital raised from a 15-billion-baht debenture issuance and a 30-billion-baht loan obtained last year, along with an additional US$2 billion (62.8 billion baht) debenture issuance over the next four years.
The move is estimated to boost its share of earnings before interest, tax and depreciation and amortisation (Ebitda) coming from HVA products to 25%, compared with 15% last year. At least 85% of the firm's Ebitda in 2020 came from refined oil, olefins, aromatics and derivative products.
Mr Kongkrapan said the acquisition of the remaining shares of Vinythai (VNT), comprising 16.2%, will be done through a delisting tender offer to strengthen PTTGC's PVC supply chain.
Over the next two years, VNT plans to double its capacity to 380,000 tonnes of PVC per year from 190,000 tonnes.
The VNT deal is expected to close within the second quarter of this year, generating new revenue early next year after Asahi Glass Co, which owns a 58.8% stake in VNT, restructures internal business units.
PTTGC is the second largest shareholder in VNT at 25%, with the remaining 16.2% owned by retail investors or in a free float on the SET at an offering price of 39 baht per share. It is estimated to be worth 7 billion baht in total.
Mr Kongkrapan said PTTGC this year estimates a revenue increase of 8% because of added capacity at its olefins reconfiguration project and downstream projects soon to be operational.
The projection was based on the average price of petrochemicals last year.
The new projects include a 36-billion-baht upstream naphtha and liquefied petroleum gas (LPG) manufacturing unit as feedstocks and a 32-billion-baht downstream unit for propylene oxide and polyols production.
He said PTTGC is also seeking startups that are developing businesses involving advanced materials and clean technology under its capital venture fund worth $30 million. Specifically, the company is looking for new technology to reduce emissions and water use in its operations.
The natural gas production pause in the Gulf of Thailand's Erawan gas block should not negatively affect its refinery and petrochemical production line because the company revamped the production process several years ago to receive a variety of raw materials, importing LPG and crude oil instead of natural gas, said Mr Kongkrapan.