BRPT Eyed on WTI Oil Price Volatility
Fluctuations in world oil prices is enough to affect the performance of Barito Pacific, Tbk (BRPT IJ). However, analysts rate BRPT still has a bright business prospects this time of year. As a side note, the BRPT successfully recorded a rise in revenues of 25.71% YoY to USD3.08Bn last year, while net profit down 38.98% YoY becomes USD72Mn in the same period.
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Head Research Narada Asset Manajemen, Kiswoyo Adi Joe mentions, volatility in oil prices that occurred in the past year significant impact for the petrochemical business run by the BRPT subsidiary, Chandra Asri Petrochemical, Tbk (TPIA IJ), since petroleum raw materials manufacture of refined petrochemical products. “Fortunately, the company raised the price to sell the petrochemical business lines so that it could still have an increased income although more limited, “he said on Thursday (4/4).
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BRPT must return preparing to risk the volatility of world oil prices. What’s more, throughout 1Q19, the price of West Texas Intermediate (WTI) oil type experienced increases of up to 32%. According to Kiswoyo, the most realistic efforts that the company could do is return set the selling price of petrochemicals to anticipate the effect of high oil prices increase further. This step is indeed quite ideal to be taken given the demand for petrochemicals that are still classified as high. “Indonesia still become importers of petrochemicals because domestic needs are high.
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Nevertheless, Analyst Mirae Asset Sekuritas Lee Young Jun rate, production of petrochemicals through TPIA would be reduced over the existence of activities turn around maintenance (TAM) in the company’s a cracker facility in June later. During production progress, TAM will be terminated because no improvement until the repayment conditions of facilities such as the initial state. The last time TAM held in facilities belonging to the TPIA is a cracker in 4Q15 then for 85 days. “For this time, TAM will only last for 55 days,” wrote Lee his research last March.
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On the other hand, the potential stagnant of production and sales volumes at the TPIA would be offset by geothermal power plants business conducted by the BRPT through Star Energy. Last year, Star Energy enough to contribute in terms of performance. This is because the income from geothermal energy business increased 23.4% YoY becomes USD522Mn.
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This increase cannot be separated from the addition of Salak and Derajat assets acquired Star Energy from Chevron in 2017. Lee Young Jun expresses, Star Energy contribution towards revenue and profit BRPT will be higher this time of year. It is supported by the low interest charges run by this company. He mentions, most Star Energy debt has been subject to amortization of USD110Mn per year for the purpose of settlement. “Therefore, we assess interest charges Star Energy will be reduced this year, so that the resulting margin will also be better.