Siamgas mulls Myanmar move, eyes LPG storage
published : 4 Sep 2015 at 03:47
newspaper section: Business
SET-listed Siamgas and Petrochemicals Plc (SGP), Thailand's second-largest cooking gas trader, will soon enter Myanmar as part of plans to take more advantage of international opportunities.
"In the second half of this year, we'll focus on expanding in new and existing markets to support revenue growth," deputy managing director Jintana Kingkaew said.
A company feasibility study into liquefied petroleum gas (LPG) storage in Myanmar showed should 1,000 to 2,000 tonnes would be possible.
Ms Jintana said a facility would cost an estimated 100 million baht, but in the initial stage the company would start with exports to the country.
Talks are ongoing with a few potential partners in Myanmar, where monthly sales of 3,000 to 4,000 tonnes are anticipated.
Ms Jintana said if the market response in Myanmar was positive, LPG storage would be the next step.
"We might be able to make a decision on the storage investment in Myanmar by year-end," Ms Jintana said.
She said SGP planned to have a presence in all 10 Asean members, but a crucial factor in any investment would be the local political situation.
"Take Cambodia as an example. We really want to invest there, but the political risk is relatively high, so sometimes we need to take a very close look before deciding," Ms Jintana said.
She said the company preferred to invest in projects that were already operational and could generate revenue immediately over greenfield ones.
For the domestic market, SGP has earmarked 500 million baht for overall expansion despite slow first-half sales.
The company will add two more LPG filling stations by year-end for a total of 45 nationwide.
"We opened three others this year and so are operating 43 stations now with a budget 100 million baht excluding land costs," Ms Jintana said.
She said the second half was traditionally better than the first half for LPG trading due to the tourism high season.
Demand for cooking gas in the services and hotel sectors will be in line with the number of tourists.
SGP is maintaining this year's sales volume target at 2.6 million tonnes, representing an increase of 6% from last year.
The revenue forecast is 55-60 billion baht this year, down from 62.2 billion last year.
Ms Jintana said the lower revenue would be in line with the LPG price dropping to a six-month average of US$460 a tonne from $885 in the same period last year.
However, the company believes it can return to the black after a net loss of 514 million baht last year.
Ms Jintana said the turnaround would be thanks to a cost reduction programme in place since last year.
Second-quarter net profit was 403 million baht compared with a loss of 96 million in the same period last year.
SGP shares closed yesterday on the SET at 11.20 baht, unchanged, in trade worth 23.2 million baht.