Kongkrapan Intarajang, CEO and President of PTT Public Company Limited (SET: PTT) revealed that the company is drafting an investment plan for 2025 and the next five years (2025-2029) investment plan, and would be presenting to the board of directors in December 2024.
As for a new partner to share the PTT subsidiary, the company has hired a financial advisor to manage the matter, which would involve screening global candidates, with some possessing strong material and some having the technology to help grow the company business, while also seeking partner for new Life Science business segment, which may be concluded within 2025.
Earlier, PTT had the plan to decrease shares of PTT Global PCL (SET: PTTGC), Thai Oil PCL (SET: TOP), and IRPC PCL (SET: IRPC).
Meanwhile, the joint venture of its electric vehicle (EV) business between PTT and Foxconn, which has invested more than $1 billion into the construction of a platform factory, was put on hold. The company is currently negotiating with Foxconn to establish it as the core of the ventures due to expertise in the industry. The EV factory was under the operation of Arun Plus Co. Ltd., PTT’s subsidiary with a shareholding of 60% in the EV venture while Foxconn holds the remaining 40%. The project is built in the Eastern Economic Corridor (EEC), and the first production phase would have a capacity of 50,000 cars per year.
In the case of TOP’s Clean Fuel Project (CFP), PTT has sent a team of advisors to provide the company with business and legal assistance. TOP can continue its normal operation during this period. The company still has enough capital to fund the project and will need to reassess the situation on how to progress with the current contractor.
The 250-megawatt Energy Recovery Unit (ERU), which belongs to Global Power Synergy PCL (SET: GPSC) and is a part of TOP’s CFP, will also continue to proceed as planned.
Kongkrapan also stated that PTT performance in 2025 is expected to improve from 2024, boosted by the exploration and extraction sector under PTT Exploration and Production PCL (SET: PTTEP). The CEO anticipated sales to increase from the expansion of both the domestic and international economies, at the same time the gas separation plant is also expected to grow as well. Overall, the petrochemical business is forecasted to perform better than this year or at least has a limited downside amid a growing economy globally that could halt the decline. Additionally, PTT is aiming to reduce operating costs down continuously from this year’s 8% reduction.
Innobic (Asia) Co., Ltd., which operates a medicine and medical equipment business, is also under consideration by PTT for a possible partnership, and if ready, the company would also enter the Stock Exchange in the future.
PTT also aims for Net Zero emission, following the current trend among the energy sector with C3 guidelines, which include:
- Climate Resilience Business, adjusting the company portfolio to grow as the company cuts its carbon emissions.
- Carbon-Conscious Asset, improving production efficiency, utilizing digital technology, and focusing on clean energy.
- Coalition, Co-Creation, and Collective Efforts for All, establishing collaboration between gaining and losing parties, and developing a platform and technology to reduce greenhouse gas, utilizing carbon capture and storage (CCS) technology.
The company is also increasing its carbon absorption rate naturally by planting and maintaining forests, which is under the responsibility of the PTT Reforestation and Ecology Institute.
Additionally, PTT is also pushing for CCS and hydrogen business, hastily investing in the technology to capture carbon produced by the company’s operations. The company is also investing in the overseas hydrogen business. Moreover, PTT plans to import hydrogen and mix it with the main fuel to decrease carbon emissions in the future.
THB 5 Million Depreciation of CFP
Additionally, an assessment from Kasikorn Securities shows that TOP would need to book a depreciation of around 4-5 billion baht for every year that the project is delayed due to increasing costs.
Currently, TOP is assessing the damage from the delay of CFP and is expected to conclude within early 2025. Kasikorn has lowered the target price of TOP down to THB 39.75 per share with “Sell” recommendation, for higher returns in other companies in the sector, such as Star Petroleum Refining PCL (SET: SPRC) at a target price of THB 7.2 and Bangchak Corporation PCL (SET: BCP) at a target price of THB 37, as these two company did not have a major downside like TOP.
TOP revealed the progress of CFP to the analyst, revealing that the company has already paid the UJV more than $4.5 billion (THB 155 billion) out of $5.3 billion (THB 183 billion) as written in the contract. This means the company still has to pay the remaining $700 million (THB 24.2 billion), while the construction has finished 90%.
However, TOP is currently looking for a new contractor to replace UJV and continue the construction, the outcome is supposed to come out within one month after the group of 28 subcontractors has signed a ratification to stop working on CFP if the delay were allowed to continue, the cost of the project will balloon beyond the initial estimate.
