PTT Exploration and Production
Play
Up 2012-2013's forecast
Current price (B) 156.00
Fair Value (B) 195.69
Market cap (B bn) 517.91
- 3Q12’s net profit skyrockets 126.6%qoq, slightly lower
than expected
- Up 2012-2013’s forecast on assumption for higher gas
selling price
- 2013’s fair value is B195.69/share. Buy
3Q12’s net profit skyrockets 126.6%qoq, slightly lower CGR
than expected
PTTEP reported 3Q12’s net profit at B17.5bn, skyrocketing 126.6%qoq but
slightly lower than our projection because we had overestimated product
selling price which actually decreased 0.26%qoq to stand at US$64/bbl
following crude oil price despite increasing natural gas selling price in 3Q12.
However, a significant increase in 3Q12’s profit has resulted from the
following reasons. 1) There is no extraordinary expense from Montara asset
impairment like it was in the previous quarter (in 2Q12 the company booked
as high as B3.3bn impairment), while FX loss has dropped by B570m. 2)
Selling volume has increased 10.9%qoq to 292,000 bbls/day from the
recognition of the 320-million-cubic-feet-per-day Bongkot project for a full
quarter and additional crude selling volume from Vietnam 16-1 project.
Overall, net profit in 9M12 stood at B43.5bn, hiking 47.1% from the same
period last year and accounting for 87% of our FY2012’s forecast.
-Up 2012-2013’s forecast on assumption for higher gas
selling price
We revise up our net profit forecast for 2012-2013 to reflect an actual gas
selling price which is higher than we have previously assumed. Under thenew forecast, gas selling price in 2012-2013 is raised to US$7.25/million BTU
from US$6.25/million BTU mainly because a selling price of gas from a new
source, Bongkot South, is higher than the existing source (since 1H12
onward), while a gas selling price usually has 3-6 months of lag time from
the oil price, so an increase in gas price will be recognized in 2H12.
Accordingly, net profit in 2012 and 2013 would increase by 17.1% and
14.7% from the previous forecast to stand at B58.5bn and B62.5m,
respectively, or the growth of 31%yoy and 7%yoy. However, we project
profit in 4Q12 to weaken from 3Q12. Although gas selling price would
increase from the abovementioned contributions, it would be offset by
weakening crude price and production and sale volume that is anticipated to
decline from annual maintenance shutdowns of many projects. Moreover, the
company might have to book extraordinary expense on the write-off, such as
for the Algeria project.
- 2013’s fair value is B195.69/share. Buy
Under the new forecast, fair value at end-2013 is B195.69/share (effect from
capital increase included). We confirm our recommendation to buy due to
long term fundamental factors that would improve continuously from new
projects. For example, the company will start recognizing Montara project in
Australia in 2013 (with average crude oil production capacity of 25,000
million bbls/day) and M9 project in Burma in 2014 (with gas production
capacity of 300 million cubic feet/day). Furthermore, in the long run there is
still the hope from the company’s investment in Cove Energy. Preliminarily,
the Mozambique source is projected to start a commercial operation in late
2018 with starting capacity of 20,000 bbls/day (according to PTTEP’s
shareholding).
