PTG Energy Plc, the operator of the PT petrol station chain and the sixth-biggest fuel retailer in the country, made its debut on the Stock Exchange of Thailand in May 2013. Chief executive Pitak Ratchakitprakarn discusses the company’s outlook and strategy.
PT Max Card members receive SMS alerts when fuel prices are about to rise or fall, says chief executive Pitak Ratchakitprakarn.
What is PTG’s business model?
The core businesses of PTG are retailing and wholesaling of fuel via PT stations that are company-owned and operated and dealer-owned and operated. We also wholesale fuel to other fuel traders (jobbers) and industrial operators in Thailand. We have 800 stations nationwide, with our own truck fleet and tank farm logistics centres to ensure timely delivery to our stations and our customers.
How does PTG manage its logistics and inventory so well?
There are two reasons. We have nine tank farms throughout Thailand with a total capacity of 200 million litres, which allows us to be within no more than 200 kilometres of any PT station, enabling a delivery time of four hours maximum and allowing us to maintain inventory levels at two or three days. Having our own large fleet of trucks is also more cost-effective than outsourcing. These two reasons ensure we can maximise our marketing margins and minimise logistics costs.
What differentiates PTG from its competitors?
There are several factors, but the core reason is PTG is smaller than its competitors, and as a result we are faster, more flexible and focus purely on the retailing business. All of our locations are rented, which allows us to set up and operate in a faster, more cost-effective manner.
Our locations are not solely limited to main roads. We look for locations that connect provinces and districts. Our own large fleet of trucks and tank farms in all regions keep our logistics costs low. Finally, our membership card has shown high growth with a total of 1.7 million members today.
Why did PTG decide to hold an initial public offering last year?
There were several reasons. First, we were able to raise 1.6 billion baht to expand the business further. Second, we wanted to improve our operations, and third we wanted to create brand awareness.
Today not many people in Bangkok know of our PT stations, as we don’t have a lot of locations in the capital. When people say they have not heard of us or may have heard of us but never refueled with us, we view this as an opportunity to increase our customer base, and the growth can be exponential. We have seen the benefits from this, as our same-store sales growth has been very positive in the past 12 months.
How will PTG further improve its brand awareness?
Through a combination of marketing, expansion of stations and using our membership base. On the two main highways in Thailand, we plan large stations. The first is in Khao Pho in Chumphon province, which every vehicle passes through en route to southern Thailand and where we have a site covering 163 rai. The second is in Chai Nat province on the way to northern Thailand, on a five-rai site.
Our Max Card has done very well since we launched it two years ago. We’ve invested heavily in IT to improve our customer relationship management and have achieved 1.7 million members at a rate of 100,000 new ones a month — by year-end we should be at 2.6 million. Currently 63% of our business is from our members, and we maintain the relationship via SMS alerts such as discounts for their birthdays or to let them know when oil prices will increase or decrease the next day so they can decide when to refuel.
What impact will the Asean Economic Community have on your business?
We see demand for oil increasing in Thailand and especially in the border areas. We already have several stations in key border areas that will benefit from this. As a company we will continue to operate in Thailand for the time being, as market opportunities here remain plentiful.
What are the biggest risks facing your business?
The main risks are generally out of our control.
For example, if the economy slows tremendously and vehicle use declines, the industry as a whole will naturally be affected. Or if oil prices are incredibly volatile on a short-term basis. But due to our locations and ability to manage inventory well, we’ve been able to mitigate these risks.
Where do you see PTG five years from now?
We’ll continue to expand the number of stations in Thailand by 200-300 locations per year and also expand the types of petroleum products we offer. We see the power of our network, and in the end our aim is to have a PT station in every district, thereby servicing all the people in Thailand.
The Executive Q&A Series is presented by ShareInvestor, Asia’s leading financial internet media and technology company and the largest investor relations network in the region, with more than 500 listed clients. This interview was conducted by ShareInvestor. For more information, email admin.th@shareinvestor.com or visit Shareinvestorthailand.com