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Energy & Environment

The Executive Talk: PTG Energy PCL (SET:PTG)

The Executive Talk: PTG Energy PCL (SET:PTG) 2017-12-01 15:24:05
Aims to Expand Operating Areas with its Brand Loyalty and Increase Non-Oil Revenue

BANGKOK, Dec 1, 2017 - (ACN Newswire) - PTG Energy PCL (SET:PTG) President and Chief Executive Officer, Mr. Pitak Ratchakitprakarn discusses the company's strategy and outlook in The Executive Talk (TET) by

TET: How many stations does PTG have today and how has the business been performing?

Today, we have 1,609 stations and are continuing to expand at a rate of 300 to 350 stations per year. Currently we are forecasting that our sales volume will increase by 20% this year. The volume has increased as a result of both the increase in number of stations and the increase in customer base. In the past, the mix between diesel and gasoline was 75% and 25% respectively, but every year the gasoline portion increases by 1% as a result of new customers, specifically passenger cars, and today it is 72% and 28% respectively.

Importantly, it is with our PT Max Card that we can ensure we will deliver value to our customers throughout all of our services. Today we have just over 7 million members, increasing at a rate of 2 million new members per year, and we ensure that the service to PT Max Card members is consistent throughout all of PTG's businesses.

The majority of our stations are Company Owned Company Operated (COCO) instead of Dealer Owned Dealer Operated (DODO). We prefer the COCO model because then we are fully integrated and are able to control the quality and the standard of both the products and the services that are offered at each station. Also, we can attain a higher marketing margin with the COCO model and ensure that we are able to provide the full benefits of PT Max Card to all our members.

TET: PTG has expanded into several non-fuel businesses such as Punthai Coffee, Coffee World, Autobacs, Pro Truck, and Renewable Energy. Could you explain the reasons behind the expansions into each segment and the impact it will have upon your business/group?

By 2022, we want the non-oil businesses to represent 60% of our total net profit and these are the initial steps to achieve this target.

Firstly, our existing non-oil services include the logistics business, convenience stores under the brand Max Mart, and food and beverage under Punthai Coffee and Coffee World. The logistic business includes our depots and fuel logistics which are to serve the expansion of the stations and to ensure that our inventory days remain low. For Max Mart, we have 2,000 to 3,000 SKUs available for customers to purchase at our convenience stores. For food and beverage business, we want to start with Punthai Coffee.

We have been opening outlets throughout our stations nationwide and thus far it has been a good success story for us with same store sales growing 25% annually. As the majority of our stations are located outside of Bangkok, PT station customer base are considered to be in the B and lower consumer category.

On the other hand, the latest acquisition of GFA Corporation, which operates 100 branches under Coffee World, Cream & Fudge and the restaurant chain; Coffee World Restaurant, New York 5th Avenue Deli, and Thai Chef Express, enlarges our A and B level customer base.

Regarding auto care service business, we have created a partnership with Japan's Autobacs Seven Co to expand to 240 car maintenance outlets within five years and recently opened our first truck maintenance service in Thailand with Sammitr Motors Manufacturing to provide comprehensive service and maintenance centers for trucks at PT stations. The aim is to expand to 100 branches in five years.

We also just launched the first rest area to accommodate truck and car users in Thailand under Max Camp. This project started from the intention to raise truck drivers' standard of living and to reduce auto accidents that occur from long-distance driving. The Government also plans to develop 41 rest areas on key routes throughout the country which we will expand accordingly.

Finally, renewable energy businesses include the first Palm Oil Complex plant and the first Ethanol production from cassava pulp in Thailand. 450K Biodiesel and 200K ethanol will be used to mix with Diesel and Gasoline, respectively. These projects are to support demand growth of PTG as we expand continuously. Furthermore, the Palm Oil Complex plant will begin its test run and then be fully operational in the beginning of 2018.

TET: What differentiates PTG from its competitors?

PT Max Card membership is important to us. We forecast that by the end of this year we will reach 7.6 million members and by 2022 we are targeting 18 million members. One card represents one family in Thailand, and 18 million members means 78% of households in the country that will be on our PTG's Eco-system.

To reach the target, we ensure that new members can register within 5 minutes at any of our 2,000 touch points. Because we are expanding and operating more stations than others in the market, there will be more locations for our members to use their PT Max cards.

Our members will be able to use PT Max Card at our PT petrol stations, Max Marts, food and beverage outlets, automotive service centers, and potentially several other services in the future, which link together under PT umbrella Points received from using PT Max card at our network and can be redeemed to obtain privileges rewards. This is the power of network that we have been able to create.

With our stations, by 2022 we plan to have 4,000 stations throughout the country. I do not know of any other business that has 4,000 locations with two to seven rai of space with parking. Thailand has 77 provinces, 936 amphurs, 7,300 tambons, so every 1.8 tambons will have 1 PT station.

As Thailand continues to become more urbanized, our locations, which today provide gas, coffee, food, maintenance services, may in the future provide logistics service and perhaps several other types of services. Again, this is what we call the power of our network.

TET: Recently, the majority of PTG's stations are located in the upcountry. Will the company look to expand more into the Bangkok area?

In 72 out of 77 provinces in Thailand, it is believed that by using our fuel they will be able to drive further and faster. The evidence of this brand loyalty has been seen in the sales volume growth in our stations.

For example, our station at Khao Yoi, when we first opened, the station was selling 400,000 litres per month and then competitors began to expand near our location which created a concern at first, but because of the PT Max Card and the brand loyalty, the station today is selling 1.8 million litres per month.

However, the rest of the provinces in Thailand, including Bangkok, Nonthaburi, Pathum Thani, and Samut Prakan, represent 32% of the total volume in Thailand. With the awareness of brand loyalty, we are going to expand more into inner and outer Bangkok and this will allow us to capture more of the market share and more PT Max Card members.

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