RPC looks to operate local malls in Bangkok

BackJun 09, 2007

Move to boost oil refiner's brand image

Rayong Purifier Plc (RPC), a medium-sized listed oil refinery, aims to expand its retail oil business in Greater Bangkok by diversifying into operating community shopping malls. Chairman Supapong Krishnakan said most of the community malls developed by Pure Sammakorn Development Co, an RPC subsidiary, would be situated next to Pure oil stations owned by RPC.

RPC holds a 51% stake in the Pure Sammakorn while Sammakorn Development Plc, a SET-listed property developer, holds the remaining 49%.

The aim, Mr Supapong said, was to expand the presence of Pure beyond just five stations in Greater Bangkok, out of the 73 it has nationwide.

Pure Sammakorn opened its first community mall yesterday at the Sammakorn housing project at Rangsit Klong 2.

The six-rai site offers various commercial services including a Jusco convenience store, MK restaurant, coffee shop, cosmetic shop, Vietnamese and western restaurants, and a tutorial school.

''Expansion through the development of community malls will help boost our brand image among potential customers in Bangkok,'' he said, adding that Pure would have 75 stations by year-end.

Suchart Hensawang, deputy managing director of Pure Sammakorn, said the company aimed to build up to five community malls within five years with an investment budget of around one billion baht.

To facilitate development, Pure Sammakorn will increase its registered capital to 200 million baht next year from 50 million baht currently, and to 500 million baht in the next five years.

The first community mall is expected to generate revenue of 25 million baht in its first operating year.

Mr Supapong also said RPC was preparing to double its oil-refining capacity to 34,000 barrel per day.

In another development, Pure Biodiesel Co, a wholly owned RPC subsidiary, is investing 400 million baht in a biodiesel factory with a designed manufacturing capacity of 100,000 tonnes per year.

RPC set up Pure Biodiesel with registered capital of 200 million baht last month.

The biodiesel factory would be located close to the RPC refinery in Rayong on a 10-rai site. Some technical support, maintenance and staff would be provided by the parent company.

Suwinai Suwanhirunkul, managing director for RPC and Pure Biodiesel, said the biodiesel factory was expected to start commercial operation in August 2008. However, production capacity would be limited at 50,000 tonnes in the first operating year, with full utilisation the following year.

Mr Suwinai said half of the total investment budget was funded by RPC and a financial institution would provide the balance. The investment budget for Pure Biodiesel would be consolidated into RPC's costs.

Return on investment is forecast at 20% or more and the project would break even in around four years, said Mr Suwinai.

RPC will distribute 50% of Pure Biodiesel's output and the remaining volume would be sold to oil refineries that cannot produce biodiesel themselves.

The company has set a revenue target at around 2.5 billion baht per year when full manufacturing capacity is used. The expected revenue would generate profit after tax at 195 million baht per year, said Mr Suwinai.

According to Mr Suwinai, the biodiesel plant needs crude palm oil, for which producers are now being approached.

''Many large suppliers are pleased to sell us but they want to sign agreements on guaranteed volumes with us after our biodiesel plant is completely built,'' he added.

RPC shares closed yesterday on the Stock Exchange of Thailand at 3.62 baht, unchanged, in trade worth 1.03 million baht.

 

Source: Bangkok Post by Aranee Jaiimsin
Saturday June 09, 2007