Thailand's PTT Oil and Retail Business Pcl (PPTOR) has set aside a budget of 74.6 billion baht ($2.5 billion) for the 2021-2025 expansion of its three core businesses, said acting CEO Jiraphon Kawswat.

Of the total budget, 34.6 per cent will be invested in its oil business, 28.6 per cent in its non-oil business and 21.8 per cent in international business. The remaining 15 per cent will be spent on other businesses and on exploring new business opportunities.

For its oil business, the company aims to increase the number of PTT filling stations in Thailand from the current 1,986 to 3,100 by 2025, Jiraphon said.

For its non-oil business, the firm has targeted expansion of its Cafe Amazon chain in Thailand from 3,186 to 5,800 outlets by 2025.

For its international business, it will focus on expansion of filling stations and Cafe Amazon branches in Cambodia, Laos, Myanmar and Vietnam (CLMV), plus the Philippines. It will also open more Cafe Amazon branches in China.

PTT currently has 329 petrol stations in overseas markets.

Jiraphon said the company would also open more charging stations for electric vehicles on main routes throughout Thailand. It is currently piloting the service in 25 PTT filling stations.

Meanwhile, State Enterprise Policy Office director general Prapas Kong-Ied on January 19 said the finance ministry will fully exercise its right to buy 153.34 million shares in the upcoming PTTOR initial public offering (IPO).

PTTOR will go public late this month to raise up to 54 billion baht in what looks set to be one of Thailand’s largest listings this year.

Prapas said: “We expect good dividend payments as PTTOR businesses are expected to achieve high growth rates.”

To fund its investment in PTTOR, the ministry will sell about five per cent of its Bangchak Corp shares to the Vayupak Fund, he said. The ministry is the Vayupak Fund’s largest shareholder.

And BBL Asset Management CEO Peerapong Jiraservijinda said his mutual fund will buy 143.15 million PTTOR shares. A cornerstone investor, BBL Asset is making the second largest investment after the ministry.

PTTOR shares are good long-term investments despite risks including technology disruption, as PTT’s management have shown their capability in managing the group’s businesses, Peerapong said.

PTT is Thailand’s largest filling station operator, while its retail arm PTTOR is best known for its Amazon chain of coffee shops. The company has potential to expand both its filing-station and coffee businesses abroad, he added.

PTT boast a 39 per cent share of the filling station market, operating over 1,900 stations in Thailand and 318 in other ASEAN countries. PTT’s dealer-owned model reduces its risks, said Peerapong, adding the company is in a strong position to make merger and acquisition deals.

The target price of PTTOR shares is estimated at 25-27 baht in the next three years, with projected earnings per share of 1.25-1.35 baht, he said. With an IPO price of 18 baht per share, its price-to-earnings (P/E) ratio is 20 times.

PTT’s non-oil business is a world leader due to high growth rate, added Peerapong.

Krung Thai Asset Management CEO and managing director Chavinda Hanratanakool was also confident that PTTOR’s business would continue to grow.

Changing consumer behaviour has seen filling stations become rest stops for travellers, so their convenience and coffee shops are benefiting from travel spending, she said. As such, PTTOR’s share price is expected to rise, said Chavinda.

UOB Kay Hian Securities strategist Kitpon Pripisankit reckoned the IPO price of 16-18 baht is quite high given PTTOR’S past performance of P/E at 23.9-26.9 times.

But taking into account its profit forecast this year, its projected P/E is just 16-18 times – making the 16-18 baht IPO price attractive to investors due to potential growth of its retail oil and non-oil businesses, he said. A fair price would be 22 baht per share, he added.

Investors expect PTT will set the IPO price at 18 baht, which has upside potential of 20 per cent, said Kitpon.