PTT Exploration & Production

PTT Exploration & Production Plc (PTTEP) 

 

- 2Q15 profit falls 84.8%qoq, still better than expected  

 

PTTEP posted 2Q15 net profit of B1.3bn, decreasing 84.8%qoq but still better than forecast because we had underestimated selling prices and sales volume. 2Q15 income turned out 4% better than projected, while other items were in line with our forecast. 2Q15 profit declined significantly because 1) extraordinary expenses were as high as B5.9m because of weak THB and hedging loss and 2) normalized profit lowered as a result of decreasing sales and selling prices and rising cost. Overall, 1H15 net profit was B9.9bn, declining 67.6%yoy from the same period last year and making up 48.7% of our full-year forecast. 

 

- Risk from weak oil prices and THB in 2H15  

 

We maintain our profit forecast in 2015, estimating 2H15 normalized profit at around B10bn or 51.3% of the full-year forecast. However, the current estimate has not yet included extraordinary expense that could arise in 2H15, especially Fx loss as a result of weakening THB from 2Q15. Moreover, Dubai crude oil price assumption used in our estimate is US$60/barrel; if the actual average price is lower than the assumption, the profit may miss our forecast. Accordingly, PTTEP’s profit is projected to decline 5.1%yoy in 2015 and then rebound 62.9%yoy in 2016 from likely increasing oil prices. 

 

- Reiterate HOLD. 1H15 dividend yield is 1.09%  

 

2015 fair value is B110 (DCF). We reiterate HOLD. PTTEP announced an interim dividend of B1 or 1H15 dividend yield of 1.09% (going XD on August 4).