Nov 26, 2012

UAC eyes Myanmar for projects

The MAI-listed Universal Adsorbents & Chemicals Plc (UAC) will expand its alternative energy and water management projects into Myanmar, with the initial investment set at 2 billion baht.

Kitti Jivacate, the president and chief executive, said the move is expected to double the company's profit margin from 8-10% now.

UAC started out as a chemical trading company that counted the Siam Cement and PTT groups among its main customers.

It has since diversified into alternative energy and water management, both of which generate greater profit margins and more sustainable growth.

The company has earmarked 2 billion baht for the Myanmar projects, with funding to come from a capital increase through a rights offering (RO) and public offering (PO), with warrants issued to existing investors.

Details will be disclosed sometime next month for the RO and at the end of next month the PO.

The warrant exercise period has been set at three years while the capital increase is expected to be completed early next year.

UAC currently has paid-up capital of 198.37 million baht or 276,474,739 shares at a par value of 50 satang apiece, and the RO, PO and warrants will add 132 million shares.

Domestically, a petroleum production plant with annual capacity of 19,681 tonnes is planned for Sukhothai province.

This project will transform crude oil into compressed natural gas, liquefied petroleum gas and natural gas liquids.

This project will require an investment of 620 million baht and start operating in next year's first quarter.

Annual revenue from this facility will be an estimated 200 million baht.

UAC also plans 10 compressed biomethane gas (CBG) projects on its own and six others with partners.

Each one will cost 60 million baht to develop, making UAC's total investment 600 million for the wholly owned projects and 180 million for the the joint ventures.

All CBG projects will be built and start operating next year.

They have been granted tax privilege for eight years.

Another project is a biodiesel plant in Chiang Mai province that will also start operating next year.

UAC has also agreed to join with Hydrotek Plc, another MAI-listed firm specialising in water management, in starting two water supply projects in Myanmar.

One is slated for Yangon at a cost of 800 million baht and the other for Mandalay at a cost of 300 billion.

Both will have local firms for minor partners.

UAC projects revenue next year at 1.1 billion baht, up from 1 billion expected this year.

Next year's profit margin will increase to 15% from 8-10% this year due mainly to the further diversification into alternative energy.

Mr Kitti said half the company's revenue will come from these business areas two years from now, up from 10-15% now.

Combined annual revenue will reach 2 billion baht in a few years, he said.

"Our main problem at the moment is a shortage of engineers to man all the projects," said Mr Kitti.

UAC posted a nine-month net profit of 103 million baht, up from 78.5 million in the same period last year.

For the third quarter alone, net profit was 30.2 million baht, up from 17.5 million.

Shares of UAC closed Friday on the MAI at 7.40 baht, unchanged, in trade worth 3.51 million baht.

Source: Bangkok Post