TPC upbeat on 2010 earnings

       Thai Plastic and Chemicals, Southeast Asia's largest PVC maker, said yesterday it was optimistic about 2010 earnings as demand should recover due to government stimulus measures.
       It should also expand its capacity once the transfer of some output to a Vietnamese plant is completed.
       "We're more confident about 2010,largely because we believe things such as volume and demand will rise after the economy has bottomed out this year,"said managing director Kanet Khaochan.
       But the market leader, which is 45%owned by top Thai conglomerate Siam Cement and whose main rivals are unlisted Indonesian firm PT Asahimas Chemical and number-three Vinythai,cannot escape the downturn this year.
       It expects lower net profit because product spreads have been squeezed and production has dropped as it moved capacity overseas, Mr Kanet said.
       "China is still playing a big part in terms of demand and this is also coupled with governments' spending efforts to stimulate all kinds of business activities,which, of course, are going to need PVC as a key material," he said.
       He gave no specific forecast, but five analysts polled by earnings tracker Thomson Reuters I/B/E/S forecast a net profit of 1.9 billion baht in 2010, down 2.8% from the forecast for this year.
       "Our business this year hasn't been as bad as we expected, but ... the overall picture is still not going to be able to compete with 2008," he said, referring to last year's 2.2-billion-baht profit.
       TPC, which has capacity of 750,000 tonnes a year in plants in Vietnam, Indonesia and Thailand, has been moving capacity of 90,000 tonnes a year to its existing Vietnamese plant, Mr Kanet said.
       Once completed, its capacity would approach 850,000 tonnes in 2009. The company expected capacity to reach one million tonnes a year within three to five years, which would put it on track to becoming the world's eighth-largest PVC maker, Mr Kanet said.
       In the PVC industry, Shintech of the US, part of the Shin-Etsu group, is the world's largest producer, followed by Taiwan's Formosa Plastics and Belgium's Solvay SA, which has a 50% stake in Vinythai.
       The average PVC price in 2009 is expected to be $780 a tonne, down from $1,000 in 2008. By year-end, the price should be about $900, assuming an oil price of around $70 a barrel.
       Shares of TPC closed on the Stock Exchange of Thailand at 18 baht yesterday, down 20 satang, in trade worth 8.06 million baht.