Rayong Purifier investing more to grow

BackApr 06, 2007

Rayong Purifier Plc (RPC), a medium-sized oil refiner, remains upbeat about its performance this year with expected revenue growth of up to 30% from 19.5 billion baht last year, according to chairman Supapong Krishnakan.

He said the company's current production output had increased to 12,500 barrels per day from 11,000 barrels earlier due to increased supply of condensate residue, a raw material, from The Aromatics Thailand Plc (ATC).

However, the raw material from ATC contains high sulphur, resulting in lower margins for the company due to the cost of the sulphur-elimination process.

Mr Supapong said the company had been seeking compensation of about 50 million baht from ATC for the higher costs. A deal is expected to be reached this year.

Rayong Purifier chairman Supapong Krishnakan discusses the company's performance and outlook at a briefing yesterday. — PHRAKRIT JUNTAWONG

He said the company's profit would improve this year due to a change in accounting methods for oil inventory valuation. It involves replacing the first-in first-out method with the average-value method, which will help steady company profits during oil price fluctuations.

"Last year we experienced an inventory loss of 84 million baht. Although the loss was only accounting, it affected our image. The new method will be more fair for us," he said.

RPC reported total revenue of 19.5 billion baht in 2006, up from 14.69 billion the previous year. It posted 2006 net profit of 183 million baht, down from 367 million baht in 2005.

To enhance its revenue prospects, the company has earmarked four billion baht for further investment this year.

The projects include a new joint venture with Sammakorn Development Plc, a SET-listed property developer, to set up Pure Sammakorn Development Co to develop and operate community malls under the name PurePlace.

Each mall will have an investment worth more than 100 million baht each.

PurePlace will consist of a Pure petrol station, plaza and convenience store, as well as a windmill to generate electricity for the petrol station and facilities on each site.

The first PurePlace, located at the Sammakorn housing project at Rangsit Klong 2, is scheduled to open in May. Another is likely to open by the end of this year.

The company aims to earn around between five million and 10 million baht from the project this year.

"We will invest around 25 million baht for each PurePlace outlet based on our stake proportion," said Mr Supapong.

In addition, he said, RPC planned to increase the number of Pure petrol stations to 75 this year from 61 now at an investment cost of two million baht per station.

The company also plans to invest between 300 million and 500 million baht to develop a condensate splitter plant with a capacity of 60,000 to 100,000 barrels per day.

This will ensure sufficient raw materials to serve its future plan to increase oil refining capacity to between 28,000 and 34,000 barrels per day from 17,000 barrels at present.

"The project development is in the stage of negotiations to seek strategic partners," he said.

As well, the company is studying a biodiesel production project with an expected investment of up to 500 million baht and production capacity of 300,000 litres per day.

RPC shares closed yesterday on the Stock Exchange of Thailand at 3.62 baht, unchanged, in trade worth 520,000 baht.

 

Source: Bangkok Post
Friday April 06, 2007