BCP – SAF: a new growth platform for BCP

BCP hosted its first analyst site visit to its newly commissioned sustainable aviation fuel (SAF) plant adjacent to the Phra Khanong refinery, following commercial start-up in May 2026. Management highlighted SAF as a strategic extension of BCP’s integrated refining and biofuels platform, leveraging existing infrastructure and supply chain capabilities. With global SAF demand expected to rise, driven by increasingly stringent aviation decarbonization mandates, particularly in Europe, SAF is positioned to become a meaningful growth driver. We remain constructive on the outlook and maintain our OUTPERFORM rating with a mid-2027 target price of Bt75.

SAF outlook remains supported by structural demand. According to Argus, the SAF market remains supported by strong long-term demand drivers despite near-term oversupply concerns. While capacity expansion in China and Southeast Asia has pressured prices, robust HVO demand, particularly in Europe, continues to support industry utilization and feedstock consumption. Looking ahead, tighter aviation decarbonization targets, expanding blending mandates, and potential policy support in China are expected to drive demand for low-carbon aviation fuels and waste-based feedstocks. Europe is likely to remain the key import market, underpinning long-term industry growth.

Leveraging an integrated platform for long-term growth. BCP’s SAF strategy is essentially a platform-expansion strategy rather than a single-project investment. The company is leveraging its refining, logistics, trading, and biofuels ecosystem to enter a structurally growing market at a lower cost and risk profile than many competitors. While near-term risks remain related to feedstock inflation, regulatory uncertainty, and global oversupply, BCP’s integrated business model, production flexibility, and established supply chain provide a solid foundation for capturing long-term growth opportunities in SAF business.

Commercial execution and expansion support long-term upside. BCP has secured commercial offtake agreements and successfully exported product to Europe, validating market acceptance and execution capability. Its integrated logistics network, including storage, marine transport, and airport pipeline access, supports efficient distribution. Management is also evaluating a 50% capacity expansion over the next five years. With key infrastructure already in place, future growth can be achieved with relatively low incremental capital, enhancing scalability and returns.

SAF to drive incremental earnings growth. The SAF business delivered a strong start in 2Q26, contributing around Bt1bn EBITDA despite less than 40 days of operation, or 3.8% of group EBITDA. We expect earnings contribution to increase in 3Q26, supported by a full quarter of operations and a favorable SAF-UCO spread. We forecast SAF EBITDA of Bt2.5-2.7bn in 3Q26 and >Bt6.2bn in 2026 (5% of forecasted EBITDA) and Bt8bn in 2027 (10%), based on a SAF-UCO spread assumption of US$1,250/t. We view SAF as an earnings-accretive growth platform OUTPERFORM rating and mid-2027 TP of Bt75, based on SOTP valuation.

Risks & concerns. Economic slowdown may weaken refined oil demand and GRM; oil price swings risk stock losses. Other risks include GHG regulations, E&P impairments, and retail price controls. ESG concerns focus on environmental impact and energy transition readiness.