Shareholders of Thai Oil Public Company Limited (SET: TOP) have overwhelmingly approved an increase in investment for the Clean Fuel Project (CFP) to more than THB 63 billion. The company’s board has been empowered to fully oversee the project’s completion, addressing construction delays caused by UJV to ensure it stays on track for completion by 3Q28.
With the CFP’s completion, Thai Oil aims to maintain a debt-to-equity (D/E) ratio not exceeding 1x, enhancing production capacity to 400,000 barrels per day and improving profit margins – benefiting shareholders in the long run.
Bandhit Thamprajamchit, CEO and President of Thai Oil, announced that during the shareholders’ meeting on February 21, 89.73% of attending shareholders approved the increased investment for CFP, amounting to approximately THB 63,028 million ($1,776 million), with interest during construction estimated at THB 17,922 million ($505 million).
The project’s total investment value is approximately THB 241,472 million ($7,151 million), with interest during construction at approximately THB 37,216 million ($1,078 million). Consequently, the board or its designees have been granted full authority for related negotiations, contract signings, revisions, and other necessary actions to fulfill the CFP’s objectives.
Previously, subcontractors have staged a strike against UJV (Samsung, Petrofac, and Saipem), the main contractors, due to unpaid compensations, causing project delays. Thai Oil has recently seized security deposits totaling THB 12 billion from UJV.
The company’s board had previously considered the capital increase for CFP and accelerated the construction to be completed by 3Q28, assuring that this increased budget will not significantly impact its dividend payment plans. Funding will primarily come from existing cash reserves, operational cash flow, and borrowing. Thai Oil intends to maintain its dividend policy of paying no less than 25% of net profits, after required reserves, as specified in company regulations and law.
Thai Oil’s funding strategy includes using existing cash reserves and operational cash flow from 2025 to 2027, issuing bonds or bank borrowing, and exploring new financial instruments such as hybrid securities, and asset management for optimal benefits. The firm asserts there are no plans for a capital increase despite the expanded budget.
Thai Oil is confident that the additional budget is sufficient to complete the project. The company has consulted with advisors and experts to cautiously manage the budget.
Financial advisor assessments noted that while the internal rate of return (IRR) for the project has decreased from 12% to 7% due to increased expenses, the elevated investment would not affect the D/E ratio, staying below 1 upon CFP’s completion.
This will enhance Thai Oil’s financial performance, with increased revenue, profit, and financial standing, bolstering competitiveness. Production volume will rise from 275,000 to 400,000 barrels per day with improved margins, benefiting the company and shareholders in the long term.
Three brokers have set target prices ranging from THB 30 to THB 35.50 for TOP shares.
KGI Securities (Thailand) has raised TOP’s target stock price to THB 35.50, up from THB 30. Meanwhile, Krungsri Securities has set a target price of THB 33, and Kasikorn Securities has upgraded its strategic recommendation to “Buy” on TOP, setting a year-end 2025 target at THB 30.10.
