PTTCH sees volume lift driving sales

       PTT Chemical Plc (PTTCH), the country's largest olefins maker, expects higher sales volume for its petrochemical products to drive profits up next year and says it is looking to expand in Southeast Asian markets.
       Margins between product prices and feedstock improved in the third quarter from the second but this year's net profit would still be less than the 11.7 billion baht posted in 2008, CEO Veerasak Kositpaisal said in an interview.
       PTTCH makes ethylene and propylene, together called olefins, used in the manufacture of plastics. With a market capitalisation of 93 billion baht, it is number one in Southeast Asia, ahead of Malaysia's Batu Kawan and Thai Plastic and Chemicals.
       "If our product spread manages to stay at this level, with our new output coming in, net profit in 2010 will be higher than this year," Mr Veerasak said.
       Citing current margins between highdensity polyethylene (HDPE), which is ethylene-based, and naphtha of about $500 a tonne, he said 2010 revenue would rise to more than 100 billion baht.
       Its new ethylene cracker, with an annual capacity of one million tonnes a year, was on schedule for a startup in the fourth quarter of this year or the first quarter next year, lifting production capacity to 2.8 million tonnes, Mr Veerasak said. It will be the largest in the region.
       Sixteen analysts polled by the earnings tracker Thomson Reuters I/B/E/S forecast a 65% rise in 2010 profit to 10.2 billion baht on sales of 108.3 billion.They forecast 6.2 billion baht in profit for 2009.
       Its efforts to introduce power-saving,cost-cutting programmes this year would help the company save as much as 1 billion baht a year, Mr Veerasak said.
       "Having said that, we're not looking to beat net profit last year, when product spreads peaked with the HDPE price about $1,700 to $1,800 a tonne," he said.
       With cash flow of 5-6 billion baht and a debt-to-equity ratio of less than 0.5 times, PTTCH is seeking foreign investment opportunities in Southeast Asian countries where there is growth potential and business cultures are similar.
       The company, which has set aside 60 billion baht for future investment, wants to expand its regional presence in a bid to compete better with China's Sinopec and Exxon of the United States.
       Its last deal dates back to July 2008,when it spent 104 million to buy a 50%stake in a Malaysian oleochemicals firm,now renamed Emery Oleochemicals,from the German chemicals maker Cognis. The other 50% is held by Malaysia's Sime Darby, the world's largest listed palm oil producer.
       Mr Veerasak expressed concern over Map Ta Phut, the country's biggest industrial estate, where the courts have ordered some operations to stop because of environmental concerns.
       If the problem was not solved, it would hurt the company's operations and profitability over the long term, he said.
       Kim Eng Securities forecast that the 2010 earnings of PTTCH could decline by up to 25% if its projects at Map Ta Phut remained suspended.
       PTTCH shares closed on Friday on the Stock Exchange of Thailand at 62.50 baht, up 50 satang, in trade worth 444.1 million baht.