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Capital Markets’ Role in Thailand Energy Sector

Capital Markets’ Role in Thailand Energy Sector. July 2014. Global Privatization – Rationales and Lessons Learned. Global Evidences – Emerging Economies Privatization. ------------------------------- Source : WorldBank Privatization Data 1988 - 2008.

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Capital Markets’ Role in Thailand Energy Sector

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  1. Capital Markets’ Role in Thailand Energy Sector July 2014

  2. Global Privatization – Rationales and Lessons Learned • Global Evidences – Emerging Economies Privatization ------------------------------- Source: WorldBank Privatization Data 1988 - 2008 • There are a considerable number of privatizations remain in the pipeline • “If privatization is an evil, why governments in so many countries have done and are still working on privatizations?” • A database of privatization records 10,197 transactions in 139 developing countries between 1988-2008, yielding US$ 773.3 billion revenues • Most profoundly, during the 1990s, a variety of rapid privatization techniques were adopted by the countries of Eastern Europe and the former Soviet Union, transforming their economies after the fall of communism • The transition of Chinese economy from communist to market-based has shown remarkable result. China contributed 6.4% of the total sales proceeds from 1988 – 1999 but contributed more 37.7% from 2000 - 2008

  3. Privatization Activities in Thailand 1 Cabinet Approval on preparation guideline and privatization process SET INDEX -------------------------- Source: SET, Phatra Securities Estimates The National Economic and Social Development Plan: The Fifth Plan (1982-1986) 2 Cabinet Approval on Management Policy for SOEs and Development of PTT 17 November 2004 IPO Size: THB 3,058 mm SET Market Cap: THB 4,327 bn 27 July 1996 IPO Size: n/a SET Market Cap: THB 3,409 bn 2 August 1989 IPO Size: THB 6,000 mm SET Market Cap: THB 388 bn 11 March 2004 IPO Size: THB 17,328 mm SET Market Cap: THB 4,514 bn 6 December 2001 IPO Size: THB 32,200 mm SET Market Cap: THB 1,607 bn 16 January 1995 IPO Size: THB 4,488 mm SET Market Cap: - THB 3,066 bn 10 June 1993 IPO Size: THB 1,318 mm SET Market Cap: THB 1,507 bn 19 July 1991 IPO Size: THB 5,700 mm SET Market Cap: THB 707 bn 2 November 2000 IPO Size THB 7,540 mm SET Market Cap: THB 1,336 bn

  4. Privatization of PTT THB Per Share 9/11 Event -------------------------- Source: SET, Phatra Securities Estimates Decision on launching and determine price: 26 October 2001 SET (LHS) Share Subscription Period: 12 - 16 November 2001 Decision on Pre-Deal Marketing: 8 October 2001 Listing Date: 6 December 2001 PTT (RHS) PTT IPO Price IPO Filing Became Public: 8 October - 7 November 2001 Management Road Show: 29 October - 16 November 2001 Pre-Deal Marketing: 15 – 29 October 2001

  5. Total Size THB 32,200 mm(1) IPO Shares 920 mm shares IPO Price THB 35 PTT’s Offering Structure ------------------------------------- (1) Includes overallotment shares (2) With +20 securities firms as underwriters Privatization Process Coordinator Domestic International Domestic Bookrunners International Bookrunners 35.88% 35.76% 9.99% 18.37% International Institutional Investors Thai Institutional Investors Syndicate Retails(2) General Public Selling Agents

  6. PTT’s Price Performance • PTT’s Price Performance is In-line With Comparable ------------------------- (1)Simple Average of Comparable companies comprises CNOOC, Sinopec, and PetroChina (2)Comparable prices are rebased to PTT’s IPO price at THB 35 SET INDEX PTT Comps

  7. Historical Spreads and Oil & Gas Prices ------------------------------- • Thai oil Analyst Presentation for 2001 – 2005 and Thomson Reuter for 2006 – 2014 • Bloomberg • Bloomberg (US$/bbl)

  8. PTT Group Use of Proceeds Raised from Public • Proceeds from Public Shareholders ------------------------ Source: SETSmart and Company Prospectus THB (bn) Total PTTEP: 40.6

  9. PTT Group Use of Proceeds Raised from Public Total Dividend of THB 510.3 bn was Paid to Public Shareholders(1) THB bn ------------------------ • Excludes RRC, ATC, TOC and NPC due to limited information • SETSmart and Company Prospectus Capital Expenditure of THB 1.3 trn were Invested(1) THB bn Paid More Than THB 469.7 bn of Tax Expenses(1) THB bn

  10. Investment Value and Return of Refinery If you were to build a newrefinery plant… Market IRR for refinery globally: 12 – 13% To achieve 12 – 13 % IRR under the assumptions on the left GRM of USD 6 / bbl is needed to maintain international market IRR of 12.8%

  11. Market Replacement Cost of Refinery • The Case of BCP ------------------------ Based on BCP’s closing price of THB 29.0 per share • Total net debt excludes net debt from solar farm businesses THB (bn) Implied EV / CDU (Market Replacement Cost) USD: 9,610 /bbl/D BCP CDU Capacity: 120,000 bbl Assume USD/THB: 1/32.0 (1)

  12. Capital Required to Nationalize PTT Group of Companies Nationalizing PTT Group of companies requires at least THB 802.5 bn This calculation does not include the value of non-listed subsidiaries such as, SPRC and GPSC THB (bn) Total Capital Needed Upon Privatization • ____________________ • Source: SETSmart

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