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New Petrochemical Leader

In a move hailed as a game-changer, Barito Pacific, through its subsidiary TPIA, has taken a monumental step by acquiring Shell Energy and Chemicals Park Singapore (SECP) on Pulau Bukom and Jurong, Singapore.



The strategic partnership between Chandra Asri and Glencore, a titan in the global natural resources trade, presents a particularly promising combination.


The essence of this collaboration is to hone trading capabilities and enhance supply chain efficiency, while also unlocking new growth opportunities in the energy and chemicals sector.


Through this partnership, Chandra Asri stands to benefit from Glencore's extensive expertise in commodity trading and optimize its portfolio of raw materials, particularly in crude oil.


This not only increasing the volume of crude oil available for processing; it's about strategically selecting the types of oil that are most profitable, thereby enhancing the profit margins from the refining process.


Source: Company


Moreover, the collaboration between Chandra Asri and Glencore extends to mutual support in logistics and product distribution. This integrated approach ensures that Chandra Asri’s petrochemical products are delivered to the market more efficiently and at a lower cost.


Essentially, this cooperation is about sharing resources and expertise for mutual benefit. Chandra Asri gains access to cheaper and more efficiently sourced raw materials, while Glencore gains access to a broad market for petrochemical products.


In the new ownership structure, TPIA will hold a majority stake of 80%, while Glencore will take the remaining 20%


Source: Company


SECP, featuring a fully integrated petrochemical facility, encompasses an oil refinery capable of processing up to 237,000 barrels per day and an ethylene cracker with an impressive capacity of 1.1 mn tons per year 


More than just a production facility, this is an industrial ecosystem designed for maximum efficiency. Raw materials are processed on-site to produce high-quality products, minimizing transportation costs and time delays, and enhancing the overall output efficiency.


The most striking aspect of this entire transaction is the extraordinary revenue potential. With a fully integrated system, SECP is expected to generate revenues around USD 10 bn.


The facility's chemical production capacity is anticipated to double to 8.6 mn tons per year. Additionally, with the upcoming CA-EDC project set to come online, this figure is projected to further increase to 9.5 mn tons per year by 2026. 


The impact on revenue? Amazing! 

Revenues are estimated to soar by fivefold from 2024 to 2026. 


Source: Company


This isn't just about capacity or revenue; it's about global recognition. TPIA is now on the verge of being included in the MSCI Index in the May 2024 rebalancing. 


With a free float market cap that has already surpassed USD 3.3 bn, TPIA not only stands on equal footing but also surpasses many of its competitors. 


Source: Sucor Research


Furthermore, with robust stock liquidity reaching an average of IDR 166.2 bn over three months, TPIA solidifies its position as a heavyweight player. 


The story of TPIA and Glencore acquiring SECP is more than just a business transaction; it is a step towards a more integrated and efficient future in the petrochemical industry.


With this bold move, we believe there will be a significant impact on BRPT, reflecting the positive ripple effects such strategic initiatives can have within the sector. 


Therefore, we maintain 'BUY' for BRPT with a target price of 2,500.


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