PTG – Opportunity & Risk in 2019

Throughout 2018, investors were all disappointed in the performance of PTG Energy Public Company Limited (PTG)  and expected to see a weak revenue at year end from the company.

In 3Q18 financial statement, PTG recorded EBITDA at THB 716 million, decreased 11% from the same period of last year at THB 806 million while its net profit decreased by 100% to only THB 1.9 million from a profit of THB 229 million YoY.

Furthermore, the statement showed that in the nine-month period of 2018, PTG’s EBITDA was at THB 2,549 million, decreased by 14% YoY, and its net profit was downed by 34% from THB 674 million in 2017 to THB 448 million in 2018.

 

On the other hand, the statement in 4Q18 that was released recently had proven that the oil sales and non-oil business were growing.

PTG had the highest sales volume of 1,060 million liters, increased by 21% from 875 million liters in 2017. The sales channel through the service PT gas station accounted for 1,016 million liters or 96%, increased 20% YoY. Meanwhile, PTG recorded its wholesales in 9M18 at 44 million liters, increased 64% from 27 million liters in 2017.

As for non-oil business, which includes food & beverage, convenient stores and other services, PTG recorded a gross profit at THB 781 million, increased 65% YoY, and the gross profit ratio increased to 10%, up 2% YoY.

In 2018, PTG’s revenue from sales and services was THB 107,829 million, increased 27% from THB 84,625 million in 2017 while recorded a higher gross profit at THB 7,443 million, increased 19% from THB 6,254 million in 2017.

This proved that PTG still has room to grow, and shareholders should have been relieved after seeing the performance reported by PTG.

 

However, PTG also had a higher cost of sales and services as well. In 2018, the company recorded SG&A expenses at THB 6,710 million, increased 27% YoY. The selling expenses were THB 5,746 million, increased by 28% and administrative expenses was THB 964 million, increased 20%.

The high SG&A expenses were the main reason that dragged PTG’s net profit in 2018 down to 624 million, decreased 32% YoY, and resulted in EPS at ฿0.37, decreased from ฿0.55 in 2017.

 

The biggest challenge for PTG is to efficiently manage its SG&A expenses, or it will continue to drag PTG’s profit year after year.

PTG’s executives announced that the target in 2019 is to increase its EBITDA by 40-50% while projecting that oil sales will grow 16-20% from the previous year. Moreover, PTG will increase its oil and LPG stations to 2,000 and 700 of non-oil service points, setting a budget for these expansions at THB 3,500 million.

Nonetheless, PTG still has risks that may limit its profit in 2019 which are THB 1,700 million of debenture and THB 1,203 million of loan that will mature this year.

In addition, PTG has its opportunity to gain higher as well as risks to limit its profit in 2019. It depends on how well can PTG’s executives manage these opportunities and risks.