Page 42 - PSTC - One Report 2023 (EN)

Annual Report 2023 (Form 56-1 ONE REPORT)
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3. Risks from fluctuating quarterly revenues:
Part of the company’s revenue comes from large-scale construction projects related to energy, such as power plant construction, gas storage, and oil pipeline, mainly private sector investments. This exposes the company to high risks of revenue loss if there are delays in investments, such as during the COVID-19 pandemic outbreak. However, as the situation is starting to improve, new project auctions are emerging, which is a positive trend that will help reduce the risk of fluctuating revenues.
To mitigate these risks, the company has diversified into other energy businesses, such as selling electricity to the private sector, which has stable revenue and growth potential in the future. This diversification creates opportunities to increase revenue and spread revenue risks from current operations, enhancing the company’s financial flexibility.
4) Risk of Price Fluctuations in Liquefied Natural Gas (LNG)
Since the sales price of LNG is not subsidized by the government like LPG, and because price structure for the LNG that PTT imports is based on crude oil prices and LNG prices in the global market, domestic LNG prices are rising and falling in line with supply and demand. In addition, changes in currency exchange rates and management approaches require monitoring of crude oil price data. In 2021, 2022 and a nine-month period in 2023, the average cost price of LNG was 308 baht per MMBTU, 525 baht per MMBTU and 602 baht per MMBTU. The Company’s preventive guideline involves close monitoring of changes in supply and demand factors and fluctuations in exchange rates, including setting pricing formulas referencing the cost prices of PTT. And in the future, if there are LNG suppliers besides PTT, the supply of LNG will be managed from multiple sources to reduce the impact of a single vendor.
5) Risk of Dependence on Major Customers of Businesses Involved in Engineering Services and Energy, Particularly Businesses Involving Natural Gas
Given that the primary revenue source of the business stems from the energy-related construction sector and the distribution of various fuel products, several factors can impact the company’s earnings. Completion of existing construction projects without new ones open for bidding from current clients, or the loss of significant customers in the fuel distribution segment, may adversely affect revenue. However, the company maintains strong relationships with its major clients and delivers high-quality services, mitigating the risk of losing them.
Moreover, the company has diversified its operations into the design and construction sector, securing contracts to install liquefied natural gas (LNG) refueling stations for industrial factories pursuing self-investment. Additionally, it has expanded its reach by laying more gas and oil pipeline systems to serve a broader customer base. These strategic moves have reduced the company’s dependence on major customers.
The Company plans to manage risks by marketing LNG customers across multiple industries, including building aftermarket strengths to meet customer needs as much as possible and planning to diversify customers to ensure that most revenue does not go into a particular group of customers as a preventive measure against risks in revenue recognition.