Loxley - OSK

RHB Research 06 Mar 2013
JV BUSINESS
BP-Castrol (45%)
Loxley has partnered with BP Oil to jointly form a business that manufactures and distributes
engine lubricants for the CASTROL and BP brands. While both products have different market
potential, they are both well-perceived. As raw materials are mostly sourced from Thailand, there is
some security to the supply chain, and the product costs incurred may be potentially lower
periodically. BP Castrol (Thailand) is among the top five leaders, commanding a 65% market share,
while the remaining 35% is split among 200 small domestic brands.
Thai Fiber Optics (40%)
Thai Fiber Optics Co (TFOC) is a JV with Bangkok Telecom, a leading copper telephone cable
manufacturer in Thailand which offers fibre optics design and manufacturing services supervised by
world leader Furakawa Electric of Japan. TFOC has been involved in projects to install 3G
infrastructures for ToT’s Phase1 network, broadband internet and WIFI networks. The company will
supply materials for the network should Loxley win the project for Phase 2 of its expansion.
BlueScope Steel & BlueScope Lysaght (25%)
BlueScope Steel (Thailand) and BlueScope Lysaght (Thailand) are JVs between Loxley Plc and
BlueScope Steel. BlueScope is an Australian world leader in coated steel and has its largest
overseas investment in Thailand, where it manufactures and distributes zinc-coated steel, prepainted
steel and aluminium/zinc alloy-coated steel. The company’s steel production plant is
located at Map Ta Phut and includes metallic coating lines and a painting operation. This plant is
the sole manufacturer of ZINCALUME, which provides a protective barrier for zinc alloy-coated steel
and has up to four times the life of galvanized steel. CRP ANTIBACTERIAL, another Thai innovation,
is a pre-painted galvanized steel product specially designed for a cool room panel application for
the food industry. The product is designed to meet USDA requirements.
L Solar 1 (45%)
The company has been constructing its 8.7MW solar energy power plant on 215 rai of land in
Bothong District, Kabinburi, Prachinburi where generation capability is 11m-12m kWh. The
company’s operations are supported by the government, e.g. promotions for investments in the
solar energy power plant by the Board of Investment of Thailand (BOI), with additional benefits
from the Provincial Electricity Authority (PEA) for renewable energy producers. Loxley can also
supply power transmission lines from solar panels to the Provincial Electricity Authority (PEA), and
provide consultations as well as install equipment for private solar farms.
Loxley GTECH Technology (LGT)
The company is a JV between Loxley and GTECH Corporation group. It is the provider of the Online
Lottery System Service Contract for the Government Lottery Office (GLO). The contract includes
the design, procuring, implementing and operating of the Online Lottery System. The system
consists of the two Data Centers (one for primary and the other for backup), an online
communication network system, and the installation of terminals to retailers selected by GLO. The
lottery contract was signed in 2006. LGT invested THB2bn in machine installation. The company will
receive 75 satang in returns per transaction. Lottery ticket sales total THB3bn per draw, which
translates into a profit of THB1.5bn a year.
RHB Research | See important disclosures at the end of this report
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