25 February 2015

Company Update

1

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The Bangchak Petroleum PCL (BCP)

Marching forward with its strategy

► Revised down 2015-2016 earnings estimates, but still see

robust recovery and strong growth going forward. ► Positive view on capital increase program to capture new

growth opportunities. ► Passed the trough, ready for good news. BUY.

Despite revising down our 2015-16 earnings forecasts and target

price to reflect lower oil prices, BCP’s net profit should recover

strongly in 2015 with very little chance of a repeat of inventory

losses and asset impairment like in 2014. The strong earnings

growth should continue into 2016. Moreover, we have a very

positive view on BCP’s earnings in the longer term as we believe

proceeds from its latest capital increase should allow it to

generate positive net cash flows from future investment

projects. We will likely revise up our earnings projection and

target price once we have more details on new investment

projects. We recommend BUY.

Revised down earnings forecasts, but still see robust recovery

We revised down our net profit forecasts for 2015 and 2016 by 10%

and 14%, respectively, from Bt4.3bn and Bt5.2bn, to reflect lower

marketing margin for its retail oil business and a decrease in EBITDA

for its E&P business due to lower oil prices. We maintained our GRM

estimate for the refinery business at US$6.0/bbl as we believe a

higher utilization rate will offset lower oil price spreads. However, as

we believe that global crude prices have very limited downside risk at

the current levels, BCP should not face inventory and asset

impairment losses. As a result, net profit in 2015 should recover

strongly from the slump in 2014. Other earnings drivers include: 1)

Solar power business, which should see EBITDA rise significantly

with the first full-year operations of its all 118-MW solar power units.

2) Operations at its refinery units that will return to full-year operations

after 46-day major turnaround maintenance in 2Q14. We forecast net

profit will increase 20% YoY in 2016, due mainly to the improvement

of BCP’s refinery operations from rising utilization rate and stabilized

GRM thanks to its 3E project to upgrade refineries and a global

economic recovery.

BUY

TP: Bt35.60

Closing Price: Bt32.25 Upside/downside +10.3%

Sector Energy

Paid-up shares (shares mn) 1,377

Market capitalization (Bt mn) 44,406

Free float (%) 34.68

12-mth daily avg. turnover (Bt mn) 143

12-mth trading range (Bt) 37.50/

26.75

Major shareholders (%)

PTT PLC

Ministry of Finance

27.22

9.98

Financial highlights

Source: SETSMART, AWS

Thailand Research Department

Mr. Napat Siworapongpun

License, No. 49234

Tel: 02 680 5094

2012 2013 2014 2015E 2016E

Revenue (Btmn) 165,246 186,490 183,016 203,569 213,229

EBITDA 7,769 9,410 5,162 10,189 11,710

Net Profit (Btmn) 4,273 4,652 712 4,343 5,230

EPS (Bt) 3.10 3.38 0.52 3.15 3.80

EPS Grow th (%) -23.8 8.9 -84.7 510.3 20.4

P/E (x) 10.4 9.5 62.4 10.2 8.5

P/BV (x) 1.4 1.3 1.3 1.2 1.1

DPS (Bt) 1.25 1.35 1.00 1.26 1.52

Div. Yield (%) 3.9 4.2 3.1 3.9 4.7

25 February 2015

Company Update

2

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Marching forward with its strategy

BCP is marching forward with its business diversification strategy and investment plan

with CAPEX of Bt90bn over the next six years to sustain its traditional oil business and

stabilize overall operating performance. Its 3E project is ongoing, while its marketing

business is continuing the network expansion plan with 40 new service stations to be

seen in 2015. To augment the EBITDA of green business, BCP plans to acquire

additional renewable power plants, apart from its current 118 MW solar farms and

upcoming 60 MW solar farm in Japan, with a long-run target to increase its overall

capacity for power generation to 500 MW by 2020. In order to secure crude supply in

the long term, BCP aims to increase its E&P production capacity and petroleum proven

reserve through investment projects by Nido up to 20 KBD and 50 MMBBL, respectively,

by 2020. Nido is BCP’s subsidiary operating E&P business.

Positive view on capital increase program to capture new growth opportunities

We estimate that BCP’s current financial position and internal cash flow are sufficient

for the above-mentioned investment projects, without the need of a capital increase in

the foreseeable future. However, BCP announced a capital increase program through

1) 40mn units ESOP and 2) PO and PP issues of 137.7mn shares each (subscription

price has not been decided yet). These plans still need to receive shareholder approval

at the company’s 8 April shareholder meeting. Management claims that the fresh cash

will be just in case there are any unexpected growth opportunities in the near future.

We believe the capital increase would depress the share price over the next 1-2

months, but we believe in the long-term it would be positive as it would generate

positive cash flows (i.e. Positive NPV) from new investment leading to an upward

revision to our earnings projection and target price. We will maintain our assumptions

without the capital increase issue until we obtain details on the subscription price and

investment that BCP will allocate the fresh cash on.

Passed the trough, ready for good news; BUY

Although we revised down our 2015F target price to Bt35.60 (7.5x EV/adjusted

EBITDA) from Bt38.10, following the downward revisions to our earnings projection,

we maintain a BUY recommendation on anticipated earnings recovery in 2015, stable

cash flow income compared with peers and potential investment in a solar farm project

in Japan which still not included in our projection, along with our positive view on the

capital increase that will likely raise our target price. In addition, BCP announced an

interim dividend payment for its 2H14 operations of Bt0.40/share, a 1.2% half-year

dividend yield. XD date is 3 March and dividend will be paid on 23 April.

Table 1: BCP’s 4Q14 earnings result

Source: Financial statement, Compiled by AWS

Unit: Btmn 4Q13 3Q14 4Q14 %QoQ %YoY 2013 2014 %YoY

Revenue from sales & services 48,059 46,835 45,749 -2% -5% 186,490 183,016 -1.9%

Cost of sale of goods & services 45,599 45,520 47,107 3% 3% 177,387 178,453 0.6%

Gross profit 2,460 1,314 -1,358 -203% -155% 9,103 4,563 -49.9%

EBITDA 1,827 1,429 -1,256 -188% -169% 9,410 5,162 -45.1%

Impairment losses on asset 54 3 -826 - -821

Norm. profit 6 1,785 2,494 40% +100%

Net profit 689 381 -2,489 -753% -461% 4,652 712 -84.7%

EPS (Bt) 0.50 0.28 -1.81 -753% -461% 3.38 0.52 -84.7%

Crude inventory gains 617 -1,407 -4,401

25 February 2015

CG Report

3

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Corporate Governance Report of Thai Listed Companies (CGR). CG Rating by the Thai Institute of Directors Association (IOD) in 2013.

Corporate Governance Report disclaimer

The disclosure of the survey result of the Thai Institute of Directors

Association (“IOD”) regarding corporate governance is made pursuant

to the policy of the Office of the Securities and Exchange Commission.

The survey of the IOD is based on the information of a company listed

on the Stock Exchange of Thailand and the Market for Alternative

Investment disclosed to the public and able to be accessed by a

general public investor. The result, therefore, is from the perspective of

a third party. It is not an evaluation of operation and is not based on

inside information.

The survey result is as of the date appearing in the Corporate

Governance Report of Thai Listed Companies. As a result, the survey

result may be changed after that date, Asia wealth Securities Company

Limited does not conform nor certify the accuracy of such survey result.

Score Range Number of Logo Description

90 – 100

80 – 89

70 – 79

60 – 69

50 – 59

Below 50

No logo given

Excellent

Very Good

Good

Satisfactory

Pass

N/A

BAFS EGCO IRPC KTB PTTEP SAT SIM TOPBCP GRAMMY IVL MINT PTTGC SC SPALIBTS HANA KBANK PSL SAMART SCB TISCOCPN INTUCH KKP PTT SAMTEL SE-ED TMB

AAV BIGC DELTA HMPRO NBC PJW SAMCO SVI TOGACAP BKI DRT ICC NCH PM SCC TCAP TRCADVANC BLA DTAC KCE NINE PPS SINGER TF TRUEANAN BMCL DTC KSL NKI PR SIS THAI TSTEAOT BROOK EASTW LANNA NMG PRANDA SITHAI THANI TSTHASIMAR CENTEL EE LH NSI PS SNC THCOM TTAASK CFRESH ERW LHBANK OCC PT SNP TIP TTWASP CIMBT GBX LOXLEY OFM QH SPI TIPCO TVOBANPU CK GC LPN PAP RATCH SSF TK UACBAY CNT GFPT MACO PE ROBINS SSI TKT VGIBBL CPF GUNKUL MC PG RS SSSC TNITY VNTBECL CSL HEMRAJ MCOT PHOL S&J STA TNL WACOAL

2S BEAUTY CSS IHL MFEC PPM SKR TBSP TSC ZMICOAF BEC DCC INET MJD PPP SMG TEAM TSCAH BFIT DEMCO IRC MODERN PREB SMK TFD TTCLAHC BH DNA IRCP MONO PRG SMPC TFI TUFAIT BJC EA ITD MOONG PRIN SMT THANA TVDAJ BJCHI ESSO KBS MPG PTG SOLAR THIP TWFPAKP BOL FE KGI MTI QLT SPC THREL UMIAKR BTNC FORTH KKC NC QTC SPCG TIC UPAMANAH BWG FPI KTC NTV RCL SPPT TICON UPFAMARIN CCET GENCO L&E NUSA SABINA SST TIW UPOICAMATA CGD GL LRH NWR SALEE STANLY TKS UTAP CGS GLOBAL LST NYT SCBLIF STEC TLUXE UVAPCO CHOW GLOW MAJOR OGC SCCC STPI TMI UWCAPCS CI GOLD MAKRO OISHI SCG SUC TMT VIHAQUA CKP HOTPOT MATCH PACE SEAFCO SWC TNDT WAVEARIP CM HTC MBK PATO SEAOIL SYMC TPC WHAAS CMR HTECH MBKET PB SFP SYNEX TPCORP WINASIA CSC HYDRO MEGA PDI SIAM SYNTEC TRT WINNERAYUD CSP IFS MFC PICO SIRI TASCO TRU YUASA

Source: Thai Institute of Directors (IOD)

25 February 2015

Contact

4

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This report has been prepared by Asia Wealth Securities Company Limited (“AWS”). The information herein has been obtained from sources believed to be reliable and accurate, but AWS makes no representation as to the accuracy and completeness of such information. AWS does not accept any liability for any loss or damage of any kind arising out of the use of such information or opinions in this report. Before making your own independent decision to invest or enter into transaction, investors should study this report carefully and should review information relating. All rights are reserved. This report may not be reproduced, distributed or published by any person in any manner for any purpose without permission of AWS. Investment in securities has risks. Investors are advised to consider carefully before making decisions.

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Head Office 540 Floor 7,14,17 , Mercury Tower, Ploenchit Road, Lumphini,

Pathumwan Bangkok 10330

02-680-5000 02-680-5111

Silom 191 Silom Complex Building,21st Floor Room 2,3-1 Silom Rd.,

Silom, Bangrak, Bangkok, 10500 Thailand

02-630-3500 02-630-3530-1

Asok 159 Sermmitr Tower, 17th FL. Room No.1703, Sukhumvit 21

Road, Klong Toey Nua, Wattana, Bangkok 10110

02-261-1314-21 02-261-1328

Pinklao

7/3 Central Plaza Pinklao Office Building Tower B, 16th Flr., Room

No.1605-1606 Baromrajachonnanee Road, Arunamarin,

Bangkoknoi, Bangkok 10700

02-884-7333 02-884-7357,

02-884-7367

Chaengwattana

99/99 Moo 2 Central Plaza Chaengwattana Office Tower, 22nd Flr.,

Room 2204 Chaengwattana Road, Bang Talad, Pakkred,

Nonthaburi 11120

02-119-2300 02-8353006

Chaengwattana 2

9/99 Moo 2 Central Plaza Chaengwattana Office Tower, 22nd Flr.,

Room 2203 Chaengwattana Road, Bang Talad, Pakkred,

Nonthaburi 11120

02-119-2388 02-119-2399

Mega Bangna 39 Moo6 Megabangna, 1st Flr., Room 1632/7 Bangna-Trad Road,

Bangkaew Bangplee, Samutprakarn 10540

02-106-7345 02-105-2070

Rayong 356/18 Sukhumvit Road, Nuen-Phra Sub District, Muang District,

Rayong Province 21000

038-808200 038-807200

Khonkaen 26/9 Srijanmai Road, Tamboonnaimuang, Khon Khaen

40000

043-334-700 043-334-799

Chonburi 44 Vachiraprakarn Road, Bangplasoi, Muang Chonburi, Chonburi

20000

038-274-533 038-275-168

Chaseongsao 233-233/2 Moo2 1st Flr., Sukprayoon Road, Na Meung Sub-

District, Meung District, Chachoengsao 24000

038-981-587 038-981-591