Earnings Call: Q2 2021

Aug 17, 2021

Good morning, analysts, fund managers, executives and PTT staff. I'm Lisa Loo from IRR. Welcome to the 2nd quarter analyst meeting 2021. In light of the pandemic, we are still organizing this session online for everybody's safety. You can follow us via Facebook Live in both Thai and English. We have simultaneous interpretation available to ensure equal access to information and also through Microsoft Team and PTT Workplace for all PTT staff. After the session, we will open floor for questions. You can ask questions via MS Team, Facebook Live and their chat box features you are familiar with. We will start with the summary of operating results and then the CEO will share with you CEO's new strategic direction and we close with Q and A. I would like to invite Koon Atopon Robibon, CEO and Kuntan Rui Boon, the CFO. Please. Good morning. They are fund managers, analysts. Today, we are going to report results of half year twenty twenty one. May I start straight away? Next slide please. These are key activities during the Q2 of 2021. We changed the approach of presentation a little bit. We put up this something that looks like donuts divided into core business and future energy and beyond energy of the future. I will elaborate on future energy and beyond. Now let me start with core business. PTT and our subsidiary bought shares of GPSC from JC. So we increased the stake by 12.73 percent involving 25,000,000,000 investment fund. And following the purchase, PTT and SMS will hold share 44.5 percent in GC and or extend the contract with CPO or 711 to operate within the petrol stations by another 10 years. So we so this will take us through to 2023 and OR and Baths jointly were selected to operate aviation fuel service at Ota Power Airport. The investment, the initial investment fund is 2,300,000,000 baht. This is expected to be COD ed in within this month. And thirdly, IPC approved the Oudra Green Fuel Project or UCF to more in response to Thailand's policy to commercialize Euro5. So the investment money is 13,000,000,000 baht COD by 2024. And Tai O bought shares in PT Chandra RC, which is an integrated petrochemical company in Indonesia to the tune of 39,000,000,000 baht. I am sure analysts are aware of this. Jundra SE has a capacity of 4,200,000 ton. So this is diversification of Tai Oil into petrochemical on top of the refinery business. Now the green part of the donut future energy and beyond, First, PTT approved Innovix in which PTT holds 100 percent to buy shares of Lotus Pharmaceutical Company 6.6%, 15,000,000 U. S. Dollars in order for PTT to expand into this business and it will enable us to learn this new business venture which will be taken forward in the future. Secondly, Innovic Asia established a joint venture with Northwood fifty-fifty with registered capital of $300,000,000 in order to operate plant based protein. The manufacturing plant will use high-tech capacity in Thailand with the production capacity of 3,000 tonne per year to be COD by the Q4 of next year. And this is the trend, the consumption trend. So this is something different from traditional vegetarian food, plant based. Meat is raw material that can be turned into hamburger and a number of other Thai dishes. That's the new trend new venture for us. And next, PTT signed an MOU with Foxconn for feasibility study of EV platform for Thailand. Clarity shall emerge this year whether we are entering into a joint venture together, but things are looking good. The finalization shall come forth soon. As soon as there's any conclusion, we shall duly inform you. Now the term platform, why we use the term electric vehicle platform, the principle is that this technology doesn't have to manufacture an entire vehicle, but it's going to serve as a platform base. It's the chassis. It is going to produce the chassis, but it is an electronic chassis. Battery and the control circuits are led out and therefore this factory is suitable to serve as platform for various brands that have not yet developed EV tech yet. And they can use this as a manufacturing base. They can co design the body together. So it can manufacture EV for multiple brands. It we can deem this a disruption technology for EV production. And from the initial study, we reckon that we can shorten the R and D period by 2 years and reducing cost by roughly 20%. And so if successful, we will proceed with joint venture and the investment shall be distinct to Thailand. And fourthly, we established a company called EV. Me plus which is a subsidiary of Arun plus which is a company that we set up to invest in the whole value chain of electric vehicle. EV Me is the application to serve as platform to create an EV ecosystem. When you are not confident about going EV or not going to this platform, there are plenty of choices for you. You can lease for about 7 days, 1 month or 3 months for trial run until you are confident and then this platform is expanded to cover various fleets that wish to add electric vehicles onto the fleet. This is a new application launched recently. We are in the soft launch phase. The actual launch will be end of this year. Please keep we will keep you posted. And 5th, PTT EP jointly with Aerodyne from Malaysia and Digital Creation established a company called AeroSky to offer drone solution services in Thailand. Main clients are those in the telecoms, electricity, oil and gas for exploration and maintenance of their assets. Next, JC has bought ordinary shares of Onyx Holding, €4,000,000,000 Onyx is into coating, resin and additives. Currently, Aonit has the capacity of 1,200,000 ton and this is the venture into high value business by GC. Next, GRSC which is the subsidiary of GPSC invested in Avada Energy Private Limited in India by buying shares equivalent to 41.6 percent, 14,000,000,000 baht investment and this investment deals with solar power plant in India. It has the committed capacity totaling 4.5 gigawatt. Next, GPSC bought shares of Shushangfang and Shushidao in the proportion of 25% worth US500 million dollars The share transfer is expected within the Q2 next year And this company operates offshore wind energy in Taiwan with combined generation capacity of 5 megawatt. And in the future, energy area, also NatureWorks is doing the 2nd polyactic acid or PLA using chugukain molars as raw materials to produce PLA. The capacity is 75,000 tons per year. The investment value is US600 $1,000,000 And to continue, if you listen to the PSA, you've heard about the activities during the pandemic. For nearly 2 years, we've been living with the pandemic. PTT is not sitting idle. We have been very active since the first wave. Early last year, we lacked alcohol and face mask. So PTT supported hospitals nationwide. We specifically supported 200 state hospitals and 5,000 local hospitals, more than 1,000,000 liter of alcohol and various medical devices and equipment back then. And if you recall also the last quarter of last year when Thailand was looking good, 0 infection, We were talking about economic stimulation. So we launched a campaign called restart Thailand job creation. Across our group, we recruited both routine staff to operate ongoing projects as well as recruiting fresh graduates to work in projects where we are collecting data for CSR. So altogether we created or we recruited about 25 1,000 people. Now by the 3rd wave, the situation is very serious and therefore we launched a project called Giving Breath Project. The video clip shown ahead of the briefing showed one of the sub projects. The start of the project, we donated, we supported ventilators to hospitals nationwide. We donated 400 ventilators along with funding liquid oxygen and donating medical equipment devices. The latest project, the video clip also showed yet one more activity under this project. We set up the end to end screening unit and field hospitals with the intention to well we could do one loop. In that we have screening unit at the Encore terminal or the former crew center of Thai Airways originally. We wanted to do office for lease more than half clients expressed interest, but now we put that on hold to turn that facility into a screening unit with the capacity of handling up to 2,000 individuals per day. We set up a home isolation care system. We distributed equipment for people in home isolation. We have 5 RAVA medicine for all who were tested positive and requiring home isolation. For those who are beyond home isolation, we put them in the field hospital, the 1,000 bed. And then for yellow cases and red cases, critical cases, we have 120 beds. So we address the whole chain. The objective, we have to work with the government. We have to work with the public health authorities and we have medical sector partners as well. We want to create a model for other big conglomerates. If these kind of chains can be implemented in key locations, it will help ease the public health burden on the government sector. And that's what I wish to share that apart from doing our business, we care for the community and the society to our full capacity. So I would like to end my part here. I would like to I'm sorry, I still have key business drivers to go through. May I mention about the key drivers for the first half year? I think you know this very well because you monitor almost on daily basis the oil price as well as petrochemicals increase in Q2 compared with Q1 or Q1Q both Q1Q and half on half basis. Mainly, we all know that demand has picked up. Many countries around the world have eased their lockdown except Thailand, of course. Thailand has just started imposing lockdown for crude and fuel oil. They are positive due to OPEC plus tight alliance. They monitor closely. They cut production stringently. And when situation improved, they increased, but they increased with prudence and gradually and they agreed. Well, everybody is still complying with what's been agreed upon. And as a result, prices has been stable, not fallen. Petrochemical, higher on the back of improving demands. In light of economic activities, inventories in China remain low even though new capacity keeps coming in to pressure the market. Natural gas Q on Q increased 8% from all sources, in line with the increasing oil price half on half down by 13% and in line with the benchmark oil prices still lower than last year. FX, you know well that baht has become weaker. Next performance, I would like to invite Kumpan Rin. Thank you very much, the CEO. So for the operation we saw all the time, for Q2 compared to Q1. And I would like to just present the Q1Q performance. So you can see the overall picture in terms of revenue, you can see that PTT Group's revenue increased by 12% as a result of the price of petrochemical and oil and as well as the sales volumes which are increased. This is because the situation of COVID in several countries are better. In terms of EBITDA, you can see that our group EBITDA increased by 10% and mainly from the Production and Exploration business, whereas the performance of other groups are relatively the same as last quarter. In terms of net profit, it is down by 25% compared to Q1. So in a normal operation result situation, it is okay. However, in Q1, there's a non recurrent item. And the PDT EP realized the profit from Oman fuel 60, whereas in Q2, GC also recorded the depreciation in OMRI. As a result, because of these nonrecurring items, therefore, Q2 net profit decreased compared to Q1. And if you see the pie chart here, you can see that performance from upstream, midstream and downstream is quite in a balanced ratio. But in the future, we hope that we will be able to increase the proportion of new energy and new business in our group's performance. If you look at the first half year performance compared to first half year of last year, you can see that it is better, much better. Revenue increased by 23%, thanks to the price SOS sales volumes, which are increased in several business. EBITDA, meanwhile, also increased more than 100% and mainly coming from the refinery business, which of which the performance is outstanding, the first half year stock gain is more than JPY 500,000,000. So as a result, the performance of the refinery business is much, much better. While the petrochemical business, all the products are increased, sales volumes are increased, and the same happens in the aromatic business. And that's why the EBITDA in this group is higher. In the gas business, the main business is coming from GPSC, and the sales price is increased as well as the sales volume and cost of gas is also down. The production and exploration business, its EBITDA is also increased as a result of sales increase. And thanks to the Oman field, the Bongho field because of the increasing sales volumes. At the same time, COH in Malaysia also start its production in February. Sales volumes also increased. The net profit also increased as a result of the increase of EBITDA. And as I have already told you this year, the E and P recognized profit from the sales of 4 month operation. And the negative factor is the impairment of GC as well as the loss from the currency depreciation. And the loss is around KRW6.8 billion and the depreciation is around this is a result of the depreciation of the Taiba. At the same time, there was also a loss from delivery totaling around KRW 25,000,000,000 of PTT EP and PTT trading. At the same time, there was tax expenses of around KRW 23,000,000,000. GC also record profit from the sales. And starting from the E and P business, the Q on Q sales increase from sales price from 40.3 to 42 0.9 and mainly because of the increase of the liquid price. And at the same time, sales price of gas remains stable. Average sales increased by 16% and this is mainly because of the Oman project and Malaysian COH. The net profit, however, is down by 47%, is down by 47%, although EBITDA is increased. And this is mainly because in Q1, profit was recognized in the nonrecurring items. And at the same time, there is an increase of tax expense of expense of USD129 1,000,000. And this is because of the increasing operation result. In terms of depreciation cost, it increased by USD 82 1,000,000 baht. In terms of the 1st 6 months operation result, the net profit increased by 46% and mainly as a result of sale increase sale price, which increased by 3% and sale volume, which increased by 20%. In terms of net profit, this is not a result not only a result of the sale price which increased, the unit cost also went down as a result of the Oman and Malaysia operation, of which the cost is lower. And I have already told you from the tax income as well as the increase of the depreciation. And as a result, the half on half net profit increased by 46%. And in terms of the PTT EBITDA breakdown by business, so starting from the gas business, Q2 as compared to Q1, you can see that EBITDA slightly increased by 1% by 2% and mainly is because of the gas EBITDA. S and M EBITDA was down by 22%. And S and M is the trading business. It was down by 22%. And this was mainly because in Q1, we record profit from the LNG export. And as a result, we recorded in Q1. However, this profit, we need to return it to the state. And that's why we return it to the state at the end of Q2. And that's why we have to book it as an expense. We have to readjust the cost of sale in Q2. And as a result, it seems that EBITDA in S and M in Q2 was down compared to Q1. In terms of cost of gas was also down to RMB6.3 from all sources from JCC and the price of fuel oil, sales volume increased by 3%. And this was mainly a result of the customers from the power sector. Their sales volume increased by 5% as a result of the increased demand of electricity, especially from the household sector. And at the same time, there were emergency shutdown for maintenance or for coal fired power plants. And that's why the increase for gas is also increased. And at the same time, And for the average sales for industrial customer, it increased in line with the increased price of fuel oil. In terms of TM or the pipeline business, you can see that the EBITDA increased by 6%, and this was mainly because of the increase of sales resulting from IPP. There was new IPP in Q2 and there was no extra expense because in Q1, we had expenses to pay to Department of Rural Highways. However, in this quarter, there was no such extra expense. At the same time, cost of sales also increased in line with the increase of the pool gas. In Q2 mainly because of the average price up. Volume sales volume also up by 1%. Thanks to LPG in high demand of petrochemical sector. So prices are higher, but LPG price is down and therefore petrochemical plants that can use flexible feed turn more to LPG. Feed cost increase on the back of rising gas price from the Gulf. In NGV Business, the loss is more by 92%, mainly due to gross profits down on the back of less income, more than less cost. We adjusted the NTV price. There's a lag time of 45 days. So when gas price increase, it would result in squeezed margins and decreasing sales volume could not stretch to cover the fixed course resulting in NGV in red. For others, mainly PTT LNG and PTT NGD EBITDA stabilizing for trading EBITDA down by 20 percent compared to the previous quarter because of 22% downward adjustment, 9 Baht per lit in Q1, 9 Baht per lit to due to less spread of LNG, LPG and fuel oil, which fared very well in Q1. But in Q2, the spread became tight. But condensate discounts also down. And so condensate discount helped improve the margin slightly, sales volume down by 4% due to falling demand of refineries as the pandemic accelerated in Q2. So those are PTT's result of PTT's own business. Now let's take a look at oil business or OR Group. Q on Q net income down by 19%. So we look at it separately, oil business. In fact, average selling price is higher in line with global oil price, but sales volume is down by 6%, mainly gasoline and diesel that decreased both in the retail and commercial sectors as the pandemic became more severe and net in profit also down because of gasoline as we shore up the price to reduce the burden on consumers during the Songkran holiday. For non oil business, actually the performance has improved even though sales revenue decreased mainly because of sales volume of Amazon from 73,000,000 to 7,000,000 cups on the back of shrinking consumer purchasing power and other non ore revenues increased. Gross margin and EBITDA slightly higher due to optimal cost management effort. Now half year results net income of OR higher than 100 percent from 2,000,000,000 to 7,000,000,000 yen. The oil business average sales price is higher on the back of global oil price, but sales volume is down by 5%. Specifically, in the aviation fuel, as travel is restricted and profit per lit also increased, resulting from retail and commercial clients whose well, the margin of gasoline and diesel are higher. For non oil business, sales volume is higher. For Amazon business, sales volume increased from 100 and 28 to 143 due to expansion of branches by 368 branches gross margin EBITDA higher on the back of higher income and cost management. So those are the performances of our group for P and R. Starting from olefins, performance has improved both increasing product price on the back of higher demand and global recovery and Chinese inventories are in the low level and hence increasing purchasing power. Product spread also improved on the back of higher demand especially PE. Plastic pellet sales volume is slightly down on GC's part because of the impact of lightning. And so capacity went downward slightly. Aromatics performance improved significantly. Bensin spread and PX spread higher. Benzene spread higher by 64%, reflecting the crude price while supply is down due to shutdown maintenance and reduction of capacity amongst the various plants in Asia and temporary pause of production in the U. S. Due to snowstorms, PX spread higher than 13% for textile and pet raising. And there are still pressures from the upcoming capacity from China in Q3. Let's take a look at refinery utilization rate of refineries group remain constant at 96%, but market GRM is down from $1.9 to $1.6 per barrel in Q2 because of rising premiums even though a spread increased. If we look at the stock gain, which impacts P and R's performance, in Q2, stock gain is down by 3,300,000,000 yen from gain in Q1 at about 10,000,000,000 yen to 8,700,000,000 yen in line with Dubai crude. The adjustment of Q2 is less than Q1, resulting in net income of P and R higher from RMB18 1,000,000,000 to RMB22 1,000,000,000 yen in Q2 on the back of improved product and spread product price and spread. Half on half performance has improved significantly. Performance is good. Product prices have picked up and sales volume also rose steadily because half year last year, there's a big shutdown maintenance for olefins and polymers. Aromatics performance improved. Also both benzene and P Express. Benzene spread increased significantly on the back of crude price and as well as higher demand and tight supply PX spread also improving on the back of demand for downstream products in the textile and garment. Refinery utilization rate of the group decreased from 99% to 96%. In the first half this year, market GRM up from $1.1 to 1 point $7 per barrel in the first half, mainly due to spread of benzene and crude which increased. Stock gain, I mentioned earlier increased by about KRW50 1,000,000,000, resulting in net income of the group higher significantly from loss last year at KRW27 1,000,000,000 to profit of JPY 50,000,000,000 in the first half of this year. For GPSC or electricity business, Q on Q, it is positive, whether it's about sales volume, which also increased. The sales volume increased by 6%, the stream increased by 2%, and this is mainly because SPP sales volumes overall increased as a result of sales to EGAAP and industrial users. Volume sales volumes of IPP is slightly down because of the Cedar Shaw power plant. Gross profit increased by 3% from 5.3000000000 to 5 point billion, and this is mainly because of the growing IPP and where's margin SPP is down because of the higher cost of gas and because of the higher cost of maintenance cost. Net profit in Q2 increased by 17% from JPY 1,900,000,000 to JPY 2,300,000,000, and this is in line with the increase of the gross profit as well as the increased dividend and increased share profit, thanks to the Saiyakbuli power plant. And then there are also other incomes mainly as a result of the recognition of the insurance compensation from the power plant. However, there's increase of expense of around RMB179 1,000,000. For first half operation result, net profit increased by 23%. And this is mainly because of the increase of the average sales price. Electricity price increased by 1%. Steel price increased by 2%. Overall, sales volumes increased, thanks to the increased sales of industrial users. And this is mainly from SPP, where sales volume of IPP is a bit down. And gross profit slightly down by 2%. And this is mainly because of the margin IPP, which is down as a result of the suspension of power plants for maintenance purpose. And at the same time, the net profit, as I have already told you, increased by 20% and also thanks to the share of profit from the Sayaburi power plant and thanks to the increased volumes of water compared to last year. And at the same time, we also recognized compensation from insurance of the growth Phase 5 power plant. So now we are moving to the consolidated state financial statements compared to on a Q on Q basis. You can see that it seems that net income seems to be down by 25%. However, the operating net income actually increased by 20%. And positive factors are margins. You can see that margins are positive factors as it accounts for RMB15 1,000,000,000 from gas, from EP and P and R businesses, whereas trading and oil, the margins are down. Stock gains also down by 3,700,000,000 yen as a result of the slightly down decline of the increase of oil price. OpEx also increased by $13,000,000,000 and this is a result of the increase of petroleum royalty. Depreciation costs and amortization also increased by KRW 1,500,000,000 and this is mainly because of the depreciation cost of production and exploration. Other income is a negative factor of around KRW 6,000,000,000. And this is net with the Brazil project of E and P impairment also increased by 3,000,000,000 yen and this is because of the recognition of GC of MRE Oli or Chemical FX and derivatives is also negative by KRW 1,700,000,000. And if we look into detail, you can see that derivative is higher by KRW 500,000,000,000. However, FX is also down by KRW 1,400,000,000 because of the Taibat depreciation. Interest and corporate income tax expenses is negative by KRW3.4 billion. CIT expenses is higher by 9,000,000,000 yen because of the GPSC sales, profit sales. And the E and P operation is also increased. The interest expense also increased by KRW 200 1,000,000. And this is the waterfall presentation now. The balance sheet, you can see that total assets of the PTT group increased by 11%. And this is mainly because cash and short term investment, which is up by TWD20 1,000,000,000. AR and other current assets also increased by about TWD100 1,000,000,000, and this is a result of the higher oil price. And when oil price is higher, AR is also higher. Noncurrent assets is up by RMB48 1,000,000,000 And this is a result of the assets following the purchase of Oman projects. And PPE also increased as a result of the acquisition of the Oman projects and the projects of Thai Oil. In terms of liabilities, you can see that AP and other liabilities increased by JPY 70,000,000,000 and this is a result of the increase of oil price. Interest bearing debt increased by JPY 79,000,000,000 as a result of the higher loans. And in terms of equities, it increased by JPY 130,000,000,000 as a result of the net profit in the Q1 of around KRW 57,000,000,000 as well as the noninterest equity, which is a result of the capital increase of OR. In terms of financial ratio, you can see that net debt to EBITDA is down from 1.6 to 1.23. And this is because of the increase of the long term loan, which is lower than the debt. And the net debt equity is also remains relative stable. In terms of the cash flow statement, at the beginning of the 3.30 billion yen and cash flow received from the operating of around JPY 150,000,000,000. The free cash flow, however, is down by JPY 88,000,000,000 because we have investment activities and mainly as a result of the PTT EP's acquisition of Oman. And financing, we received around JPY 50,000,000,000 as a result of the issuance of the IPO of OR and new loans. And as a result, during the first half of the year, the cash we have cash out of around R40 1,000,000,000. And combined with the beginning of the period, we have cash around $291,000,000,000 So at the end of the period, we have cash of around 38,000,000,000 yen. May I continue with the outlook, starting with the global economic outlook which everybody is monitoring closely. IMF projected global economic growth at 6% and increase and adjust the GDP growth of U. S. And Eurozone to 7% and 4.6%. At the same time, adjusting downwards growth of countries such as China at 8 point 1% from 8.4%, Japan 2.8%, India 9.5% from plus of 12%. Now it's revised downward due to the outbreaks. Thailand likewise, projection adjusted downward to 2.1 factors, positive factors. Economic activities are likely to gradually pick up or increase. And the fiscal stimulus packages of industrialized country will have impact on recovery. And in order to stimulate economic recovery, negative factors include the delayed vaccine rollout in many countries or in many countries, there are vaccine deniers, especially in the U. S. They constitute quite a sizable group of population and the outbreaks of new variants we have to watch closely. And the pent up demand bottlenecks of value chains as well as weakening currency will drive inflation in many countries. It may lead to early plucking off of stimulus measures. Now let's take a look at Thailand. Various institutions have come up with projection of the state of the Thai economy that this year it will expand between 0.5% to 2%, the latest. The National Economic and Social Development Council has revised it downward to between 0.7%. And I reckon that next round, we can anticipate another downward adjustment. For Thailand, the main engine of the economy is export, which is recovering on the back of global demand, especially auto parts, electronics, machineries and agricultural products. In fact, during the latter half, now petrochemical products, energy fields at PTT export have improved significantly and the improved price factor. So these are contributors to the economy. Still, we have to watch out for negative factors. The very high infection rates and delayed vaccine rollout, the lockdowns in major cities and the plan to open up the country to welcome tourists in the latter half of the year, we have to closely monitor. A lot of challenges remain Phuket. The Phuket sandbox hasn't proceeded as planned. Next, petroleum and gas outlook. This year, we project that all petroleum products price will increase. Can you please bring up the slide? I think we are trying to synchronize the slide presentation. The our petroleum product outlook for 2021 higher across the board due to increasing demands on the back of global economic recovery. In any case, we have to closely monitor new variants. And OPEC Plus, they are complying, but they still crank up the production volume. So between now to end of the year, the production is about 2,000,000 barrels per day. We have to watch whether demand can match with the cranked up supply or not. And also the we have to monitor Iran, which may increase production and Iran itself right now. We have to keep an eye on the new round of nuclear negotiation. In terms of numbers, Dubai averaging at $63 to $68 per barrel compared with $22 per barrel last year for oil price spread. GM, Singapore GRM in 2021, we anticipate it to be $2 to $2.5 compared with 0.4 dollars So that's quite remarkable improvement. Gas price, Asian spot LNG, we reckon it will be in the range of $12,000,000 to 13,800,000 compared with $4.3 per 1,000,000 BTU due to higher gas demand in China in response to recovery. And European countries also pay closer attention to carbon emission and coal use is being reduced and gas is replacing that. So that's a trend for petroleum product. For petrochemical, all of things, aromatics this year prices are up across the board compared with last year because of economic recovery. In any case, we there will still be pressure from COVID-nineteen outbreak And supply is likely to increase due to capacity coming into the pipeline in the latter half and the return of U. S. Export to Asia following the polar storm. So HDPE up 28% year on year well, from last year at $180 per tonne. So we reckon it will be up to 1500pp, up 28% from 963 to $1200 per tonnebenzene up quite significantly 83% from 400 to the tune of 800 or 900 PX up 48% from 5.77 to 8 $30 to $8.80 per ton this year. Now let's take a look at the guidance for PTT Group. For the latter half of the year, we look forward to performance recovery gas business. Gas demand is expected to increase by roughly 1% from industry and power generation. On the back of recovering Thai economy, again, we have to keep an eye on it very closely. This is improvement compared to last year, but whether growth is sustained or not, we have to wait and see. In any case, gas demand growth projection is at about 3.1% compound annual growth rate. The sales volume in petrochemical higher on the back of increased capacity of gas suppression plant, utilization rate higher from 87 to the range of 92 to 90 for average gas price will stabilize as oil price improved and then it will be averaging retroactively. So it doesn't peak that much. Now for PTE Group's business for EP oil price is recovering and sales volume of EP higher by EP higher by 16% due to acquisition of new assets. And costs have become more competitive for EP. Previously, dollars 30.5 per barrel now is down to $28 to $29 per barrel. Thanks to acquisition of the Oman 61 block and our business OR, it will be impacted by the COVID-nineteen outbreaks and lockdown measures of various provinces. And so consumers purchasing power shrinks. In any case, OR itself has plans to expand and strengthen its network consistently with the plan to expand the network from 190 2 in Thailand and overseas. It will add on EV charting stations to complete 100% target by end of the year non oil. Amazon still expanding continuously. This year, 552 branches in country, 400 overseas, 132. Refinery is expected to recover. I already mentioned GRM to 2.5 year rate is projected at 95% to 97%, close to last year's figures. For petchem, The for the latter half, again, we have to watch closely on the pandemic outbreak situation. In any case, the overall picture of 2021 is higher. Spread trend is higher. The production capacity, both aromatics and olefins, higher on the back of increasing demand. So these products are exported as well. And demands are rising. Power generation business, GPSC, power demand, power and steam demand from industry plants in Mathapur, up by 4.5% compared to 2020. Projects to be COD ed towards end of the year, the 5th gas pipeline divided into 3 phases. 1st phase, it's due in Q3, Phase 2, Q1 next year. And 3rd phase, December next year, the Rajaburi Wang Noi gas pipeline, construction completed. We are testing the system COD expected in September this year. For OR, they established a central bakery and beverage mixing in order to enhance quality control and optimize efficiency of the business. And it will start to roll out in September this year plus our high quality plastic recycling project of GC. The production capacity is 45,000 tonnes per year COD Q4 this year for IRPC. Joint venture with Innoebig, the wholly owned subsidiary of PTT to manufacture nonwoven fabric. Inopolit, that's the name of the venture for use in face mask. The when we call it face mask, they just assemble. They have to import the raw materials. But this factory for the first time will manufacture in Thailand to supply raw materials for face mask to substitute to to import. Production capacity, 2.5 2.1 k ton per year COD end of this year. So that's good news for you, GPSC Aveda, The solar power plant, I refer to total committed capacity of 4,500 Megawatt. For GPSC portion, it is 1900 Megawatt. This, they have already COD 1500 and under construction about 3,000 megawatts. COD will be gradual next year and the year after that's already committed. Shutdown maintenance plan as shown on screen, our routine work. Next, today, I would like to talk more about the vision of PTT Group. So we have a new vision earlier this year and I would like to share our new vision to you today. So on this page, you can see that we have been evolved starting from 1978 when we first established. At that time, we were tasked to oversee the shortage of the national energy. And then we were evolved. And in 1984, we tried to upgrade ourselves from the state owned enterprise into conglomerate. And in 1997 to 2,001, that was a period of our IPO. And following the IPO, we went into M and A and try to resolve the economy and we got fund. And in 2005, we adjust our vision and try to strengthen ourselves in the international market. And at that time, we set our vision to become a tri premium multinational energy company. And whether that mission this mission which we have been implemented up to the end up to earlier this year, so we have already achieved as a Thai premier and energy company. And yes, we are Thailand's leading energy company. And we are also a leading multinational energy company because we are one of the companies in the 100 DJSI. And that's why we feel that we have already achieved our vision. And that's why it's time that we revamped our vision. And this attempt has been going on for a while. And this is a result of the disruption of what is going on in the world's energy situation as well as what is going on socially. Because of these factors, we feel the need to readjust our vision. And as you can see now in the next slide, that is our vision, our new vision is powering life with future energy and beyond. And if you look at this vision, there are 2 parts. Powering life is our organization's purpose, meaning that this is the purpose, this is the Kaesong debt of our organization. So Powering Life is the represents our drive, Powering. And life has a wide meaning, which refers to life of an organization of the country and of the world. So Powering Life means that we intend to drive everyone to make sure that everyone can live happily. And with future energy and beyond, which is the second portion, this represents our strategy. So how can we take care of the society? We will take care of the society through future energy. So, fossil fuel energy alone may not be enough. And then beyond means that we further envision businesses outside the energy sector. And when I said beyond, we mean mainly from the country's curve. So coming back to the vision, powering life with future energy and beyond, this is going to also increase or add to the creation of the country's S curve. So all in all, this is our vision. And now I wish to go into detail. For Powerling Life, we intended to have the sustainable growth. We will invest through partnerships and platforms. And PDT, to be able to grow in the future, we may not be able to grow alone. We have to do it with our partners, and we are big enough to become a platform for start up companies or SMEs so that we can grow together. The second one is we intend to have a positive contribution to enhance livelihood to the society. And this will be done through our business and our CSR activities. And finally, the third one is the low carbon society. And this means that we will conduct our business that respond to social and environmental needs. So now for the portion of Future Energy and beyond. And you can see that there are 2 colors in this slide. Future Energy is in blue, and beyond is in yellow. Of course, Future Energy will focus on future energy businesses and FOS new businesses. So for future energy, we will focus on the renewable energy, storage and EV value chains. And right now, we are conducting a feasibility study on hydrogen. For beyond portion, there are 5 to 6 business that we will underline. The first one is the Life Science business. And in a while, I will go into details. So of the 6 business, Beyond Business, they are Life Science, which includes Pharmaceutical Businesses. Mobility, Life Science is the 2nd. High Value Business is the 3rd. Next is Logistics and Infrastructure, AI, Logistics, Digitalization. And finally, news business that we are ready to explore. And you can see that these 6 platforms will help increase the platform in order to realize the country's S curve. Next slide, please. And I will just try to take you to our the direction the future direction. So currently, we are very familiar with the upstream and downstream, and we will increase the future energy. And for the upstream energy, when we talk about future energy, of course, we are talking about renewable energy. But then from now up to 10 to 20 years, this is the transition period. This is not going to turn everything from one thing to the other overnight. So because it is the transition period, so the best transition field right now is natural gas. So of course, we will continue to be in this business, and we will expand the investment in this business. And of course, in the upstream business, we will accelerate the LNG value chain. We will continue to expand our LNG portfolio, and we will focus on the LNG portfolio where if we acquire a business, it will mainly an acquisition of gas fields as well as the medium gold is the portfolio will be around 3,000,000 to 4,000,000 tonnes and 29,000,000 tonnes in 2,030. For the downstream business, we use the word powering downstream along with future energy. This means we will adjust ourselves in the existing business in order to comply with the trend of the world. And for the downstream business, we will reduce our exposure in the refinery business, and we will increase the proportion in the new business. And in addition, we will focus on energy through Project 1 within the group. And we will also upgrade our management in the excess from the excess of the internal or domestic production from the refinery business. So we will introduce optimization tools in order to manage the excess. We intended to become a player so that we will have a bargaining power in the region. And this is about the downstream that we envision. And of course, in this downstream business, we will continue to expand in the petrochemical businesses, especially in the specialized branch of business. For future energy, as I said before, the focus will be on the RE, Renewable Energy. A company called Arun Plus will be is established in order to invest in the entire value chain. And we will also focus on the energy storage system. GPSC pilot plant is already starting using the semi solid technology. And now the market is being studied. There is a possibility to expand further. The next slide is talking about the beyond energy that I mentioned earlier that we have in place 6 businesses. For Life Science, there will be 3 main business, whether it's about pharmaceutical business, operate a plant or to produce plant based meat. And for pharmaceutical business, we acquired Lotus, a stake in Lotus in Taiwan in order to study or to acquire the know how. And actually, it is quite useful because just recently, the medicine which is required for treatment for COVID-nineteen treatment actually at that time the Farvipiravir, we had only 4,000 bottles of that medicine. And thanks to this company, we were able to import an additional 2,000 and then donate it to the government. And next month, we plan to import another 4,000 bottles. So this is like an extension or expansion into the pharmaceutical business. If you ask us about the know how, where the know how is coming from. In our group, there are people who graduate here from in pharmaceutical and chemical businesses. And so these people are very competent in their knowledge. And in addition, we the way that we expand our business from our expertise, for example, in the nonwoven fabric plant, this is also an extended investment, which is coming from what we produce in our petrochemical business. In terms of HVV high value business, GC is the main leader by acquiring 100% in Annex And in terms of AI Robotics, we are currently studying the feasibility. We have a company. We have established a company and we do not only we do not sell only cloud storage but also solutions. And we have collaborated with Microsoft in order to acquire know how in relation to cloud. And PGT EP also established a subsidiary to oversee AI, robotics and drone. And for the infrastructure business, the target is to enter this business as a third party logistic partner. We will manage daily warehouse, rail and terminal as well as value added services in packing and assembly. The operation has partially started. For example, PT Tank has collaborated with its partner and get concession at Sirasha no, no, at Lam Siban Phase 3 terminal. And this has already been approved as well as in Magda Put Phase 3. And one area that we focus is the rail business and also the and finally, the mobility and lifestyle. OR will be a leader in this business. OR is not only just sales gas or gasoline, but we try to set up our position as in the mobility business. So this slide shows actions and activities. During the brief period after the revision of our Vision, Future Energy, GPSC acquired 41.6% shares in Indian Solar Power Developed Per Avada 25% share of offshore wind farms in Taiwan, 90% shares in solar power plant. That's a rooftop project or EV value chain we signed MOU with Foxconn. Whether to enter into the JV or not, please stay tuned. We will know soon or the establishment of Arun Plus subsidiary, Swap and Go, Swap Batteries for motorbikes for new business, I already explained, buying shares in Taiwanese Pharmaceutical Company, Lotus Plant Based Meat of No Food, actually a number of collaborations with the pharmaceutical organization, with the R and D center in order to upscale the production of Favi P. R. V. R. V. R. V. R. V. R. V. R. V. R. V. R. V. R. V. R. V. R. V. R. V. R. V. R. V. R. V. R. V. R. V. R. V. R. V. R. V. R. V. R. V. R. V. R. V. R. V. R. V. R. V. R. V. R. V. R. V. R. V. R. V. R. V. R. V. V. R the actual pharmaceutical properties. That project is to bring about pharmaceutical supply and also oncology drug. It is progressing well. Or the collaboration to produce herbal medicine with Ciri Rab Hospital to commercialize. High I mentioned mobility and lifestyle, I touched upon, so you will see a range of novel activities by ORR, for example, buying shares in flash or joint venturing with Oka to. So these can be added on OR's own chains, especially the network of petrolization during the pandemic. Of course, the fuel cell, the oil cell itself has decreased, but non oil, food, fortunately, they are not subject to shutdown orders. So food outlets in petrol station, even though people cannot dine in, they can order takeout. So these are examples of activities we have implemented following the unveiling of the revised vision a few months ago. In terms of investment direction and long term goal, we have done we have completed strategic thinking sessions and we have come up with the big picture, the macro direction of the future that I would like to share with you today. We set the target of new growth, I. E. Net income from future energy and beyond undertaking at the tune of more than 30% net profit share by 2,030. And businesses, for example, LNG, we set the target of 9,000,000 tonne in our portfolio. Power generation, if you remember, we revised figures to be more ambitious. For example, power from conventional sources, same as before at 8 gigawatt. But renewables, we revised upward from 8 to 12 gigawatt. So, big deals have already happened, as you can see. Clean Growth, we set the target of reducing greenhouse gas emission by 15% from the base year of 2020. Now whether we achieve net 0 target, As we speak, we are conducting intensive revision in order to set PTTs emission targets. We heard the terms net 0, carbon neutrality. We are scrutinizing these and very soon we will announce something. Of course, it has to be compatible with the national strategy. Thailand itself is examining these targets. In terms of CapEx, the percentage of CapEx, we will invest in new business and future energy roughly to the tune of 32% and strategic direction by business. For you to see the picture, E and P, expand growth for high growth and focusing on gas for gas built global LNG portfolio P and R supply chain integration, the synergy and moving up to high value chain, more specialization. We start a petrochemy for refineries which is actually is supposed to be in Indonesia. The plan is still lacking in terms of capacity. So there are rooms for growth in Indonesia. And of course, we will build upon the existing network which has strength in solvents, oil and retail. I mentioned already focusing on customer oriented businesses and power business generating growth domestically and regionally, new energy. As I said, we focus on renewables, energy storage system and EV value chain new business. We are on the verge of scaling up following feasibility study and close scrutiny for a while. I'm not sure whether I can say or not, but within this year we should be able to announce some deals to this effect. So that's the direction now. I well, originally, my staff have prepared slides to talk about clean and green strategic execution, but I requested that as we are in the process of reviewing, we need to incorporate updates and changes. So please hold, allow us to crystallize and come up with something more solid. We will share with our analysts and fund managers' friends