PTT Exploration and Production - Global Alliance Partners
PTT Exploration and Production Underperform (15E TP Bt122.00)
Company Update
Close Bt114.50
Energy
Earnings upgrade/ Earnings downgrade/Overview unchanged
April 10, 2015
Challenging quarter
FY15
FY16
Consensus EPS (Bt)
8.710
9.857
KT ZMICO vs. consensus Share data
‐12.3%
‐1.6%
Reuters / Bloomberg
PTTEP.BK/PTTEP TB
Paid‐up Shares (m)
3,969.99
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
455.00/13,964.00
Foreign limit / actual (%)
40.00/20.72
52 week High / Low (Bt)
172.50/99.75
Avg. daily T/O (shares 000) NVDR (%)
5,867.00 4.04
Estimated free float (%)
34.68
Beta
1.55
URL
www.pttep.com
CGR
Patcharin Karsemarnuntana Analyst, no 17834 [email protected] 66 (0) 2695‐5837
Lack of positive catalysts Despite the lower risk on PTTEP’s poor asset quality going forward after the huge impairment loss charged in 4Q14, we see no earnings acceleration in 1H15E (likely to drop sharply YoY) given sustained high unit costs against the lower ASP. Thus, we maintain our “Underperform” rating for PTTEP even though its current 1.1x 2015E PBV is trading at the lower bound zone of ‐2.0SD. Expected to deliver Bt5.6bn NP in 1Q15E PTTEP’s 1Q15E earnings reflect its operation line with negligible non‐ recurring items; NP is projected at Bt5.6bn (‐55% YoY, but reversing from a net loss in 4Q14) and core profit is projected at Bt6.4bn (‐49% YoY, +56% QoQ). The weak operation YoY is largely blamed on the lower ASP and higher unit costs. Meanwhile, the improving core profit QoQ is mostly attributable to the minimal US$3mn write‐off expenses on dry wells (vs. US$103mn in 4Q14) despite the smaller sales volume and the lower ASP. 2015‐16E NP maintained We see no earnings acceleration in 2Q15E given the expected flat sales volume (with the volume resumption from Contract 4 to be offset by the lower gas volume from the 13‐day planned shutdown in Myanmar fields). We maintain our 2015‐16E NP of Bt30.3bn and Bt38.5bn, respectively, calling 34% CAGR from its low base in 2014 (due to the huge impairment loss). Meanwhile, its 2015‐16E core profit is projected to drop 13% CAGR, mainly due to lower ASP to US$47.5‐52.6/boe following the de‐based oil price and the lag time of the declining gas price despite the growth cycle of its sales volume to 342‐343 kboe/d in the period. Maintain our cautious view on oil prices in 2015E We maintain our cautious view on oil prices in 2015E with a Dubai price assumption of US$50/bbl (YTD US$52/bbl). The supply glut should continue given the seasonal low crude demand in 2Q following the planned shutdowns of refineries (especially in Asia) and record‐high oil production by Saudi Arabia (to 10.3mbd in Mar‐2015). Moreover, supply would also be impacted by the lifting of sanctions on Iran’s oil exports should a comprehensive agreement between Iran and the six major powers on the Iranian nuclear program be reached by end‐Jun (after a nuclear deal framework was agreed upon at end‐Mar). Financial and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2012 212,537 57,316 17.08 26.7% 5.80 82.65 2012 6.70 3.34 1.39 5.1% 21.7% 13.8%
2013 224,973 56,186 14.08 ‐17.6% 6.00 96.86 2013 8.13 3.21 1.18 5.2% 15.8% 14.2%
2014 247,817 21,490 5.19 ‐63.1% 4.50 104.19 2014 22.06 2.70 1.10 3.9% 5.4% 2.3%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 6
2015E 198,771 30,313 7.64 47.1% 3.50 108.33 2015E 15.00 3.74 1.06 3.1% 7.2% 7.7%
2016E 215,407 38,502 9.70 27.0% 3.69 114.34 2016E 11.81 3.31 1.00 3.2% 8.7% 5.0%
Expected to deliver Bt5.6bn NP in 1Q15E PTTEP’s 1Q15E earnings reflect its operation line with negligible non‐recurring items; NP is projected at Bt5.6bn (‐55% YoY, but reversing from a net loss in 4Q14) and core profit is projected at Bt6.4bn (‐49% YoY, +56% QoQ). The weak operation YoY is largely blamed on 1) the lower ASP to US$49/boe (‐24% YoY in line with declining liquid price); and 2) higher unit costs to US41.6/boe (+11% YoY with higher depreciation expenses as the main cause given the larger sales volume from Montara YoY and the higher provision on decommission costs). Meanwhile, the improving core profit QoQ is mostly attributable to the minimal US$3mn write‐off expenses on dry wells (vs. US$103mn in 4Q14) despite the lower sales volume to 326kboe/d (‐6% QoQ due to a smaller sales volume contribution from Montara and Contract 4, with the latter having a 16‐day planned shutdown linked to the field itself and to Erawan’s gas station with the gas pipeline connected to the field) and the lower ASP to US$49/boe (‐13% QoQ). Figure 1: PTTEP’s 1Q15E earnings preview Profit and Loss (Btmn)
Year‐end 31 Dec
Revenue Gross profit EBITDA Interest expense Other income Income tax Forex gain (loss) Other extraordinary items Gn (Ls) from affiliates Minority interests Net profit (loss) Core profit (loss) Reported EPS (Bt) Gross margin (%) EBITDA margin (%) Net margin (%) Current ratio (x) Interest coverage (x) Debt / equity (x) BVPS (Bt) ROE (%)
% YoY
YTD (%15E)
(19.8) (35.2) (24.1) (16.1) (20.3) (49.1) (100.0) nm 33.5 nm 41.1 (44.7) 47.1
24.3 22.6 26.2 27.3 15.7 15.6 nm ‐ 20.0 nm 18.5 23.5 18.5
1Q14
4Q14
1Q15E
% YoY
% QoQ
2014
2015E
59,192 33,114 41,441 (1,845) 487 (11,184) (164) ‐ (4) ‐ 12,435 12,599 3.12 55.94 70.01 21.01 1.93 13.63 0.34 95.52 13.02
60,348 24,458 39,502 (2,692) 917 (8,170) 4,237 (32,731) 29 ‐ (24,415) 4,117 (6.34) 40.53 65.46 (40.46) 1.94 5.20 0.34 104.19 (23.12)
48,379 18,413 34,093 (1,936) 550 (2,822) (816) ‐ 30 ‐ 5,607 6,424 1.41 38.06 70.47 11.59 2.00 5.48 0.27 105.60 5.39
(18.3) (44.4) (17.7) 4.9 12.8 (74.8) 396.3 nm nm nm (54.9) (49.0) (54.7)
(19.8) (24.7) (13.7) (28.1) (40.0) (65.5) nm (100.0) 5.2 nm nm 56.0 nm
247,817 125,961 171,833 (8,434) 4,391 (35,536) 4,809 (32,471) 112 ‐ 21,490 49,341 5.19 50.83 69.34 8.67 1.94 10.51 0.34 104.19 5.39
198,771 81,587 130,373 (7,080) 3,500 (18,103) ‐ 3,009 150 ‐ 30,313 27,304 7.64 41.05 65.59 15.25 1.31 6.90 0.39 108.33 7.19
Source: KT ZMICO Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 6
Figure 2: PTTEP’s quarterly operational data A) PTTEP’s quarterly petroleum sales volume
Source: Bloomberg, KT ZMICO Research
B) PTTEP’s quarterly ASP and gross profit margin
Source: Bloomberg, KT ZMICO Research
Figure 3: PTTEP’s PBV band and its correlation to oil prices A) PTTEP’s PBV band
Source: Bloomberg, KT ZMICO Research
B) PTTEP share price in correlation to the crude oil price
Source: Bloomberg, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 6
Figure 4: PTTEP’s valuation comparison with regional peers
A) PTTEP’s 2015E PBV and ROE comparison with regional peers
B) PTTEP’s 2015E PBV/ROE comparison with regional peers
Source: Bloomberg, KT ZMICO Research
Figure 5: PTTEP’s valuation comparison with regional peers NAME PETROCHINA CO LTD‐H SINOPEC SHANGHAI PETROCHEM‐H CHINA CITIC RESOURCES HOLDINGS LTD CNOOC LTD HONG KONG BHARAT PETROLEUM CORP LTD HINDUSTAN PETROLEUM CORP INDIAN OIL CORP LTD OIL & NATURAL GAS CORP LTD RELIANCE INDUSTRIES LTD INDIA HANWHA CHEMICAL CORP LG CHEM LTD SK INNOVATION CO LTD LOTTE CHEMICAL CORP S. KOREA FORMOSA PLASTICS CORP NAN YA PLASTICS CORP FAR EASTERN NEW CENTURY CORP TAIWAN PTT PCL PTT EXPLOR & PROD PUBLIC CO THAILAND AVERAGE
Mkt Cap (US$Mn) 437,655 11,163 1,411 68,785 9,445 3,621 14,644 42,563 46,638 2,194 15,406 9,394 7,325 15,542 17,656 5,513 29,140 13,968
PER (x) 14E 15E 24.2 15.0 22.6 20.0 23.4 17.5
PBV (x) 14E 15E 1.5 1.4 2.5 2.3 2.0 1.9
EV/EBITDA (x) 14E 15E 9.6 8.0 14.7 14.2 12.2 11.1
#N/A 17.7 17.7
10.7 10.5 10.6
1.0 1.3 1.2
0.9 1.2 1.1
14.2 4.7 9.4
7.2 3.8 5.5
18.5 16.9 15.2 10.6 12.0 14.7
14.0 11.6 10.8 9.2 11.3 11.4
2.8 1.5 1.3 1.4 1.3 1.7
2.5 1.4 1.2 1.3 1.2 1.5
11.8 11.1 12.1 5.1 9.5 9.9
9.5 9.5 8.5 4.6 8.3 8.1
26.2 15.0 13.7 16.8 17.9
14.7 12.1 11.2 13.5 12.9
0.6 1.4 0.7 1.2 0.9
0.5 1.3 0.6 1.1 0.9
11.3 6.7 9.6 8.3 9.0
10.0 6.0 8.6 7.5 8.0
20.6 18.0 17.6 18.7
18.2 16.2 16.6 17.0
1.7 1.7 0.8 1.4
1.7 1.7 0.8 1.4
26.6 17.7 11.9 18.7
25.2 16.3 10.9 17.5
10.0 15.0 12.5 17.5
8.7 11.8 10.2 13.3
1.2 1.1 1.1 1.4
1.1 1.0 1.1 1.3
5.0 3.7 4.4 10.6
4.2 3.3 3.7 9.0
YLD (%) 14E 15E 1.5 2.3 0.9 1.0 1.2 1.6 ‐ ‐ 1.8 2.5 1.8 2.5 1.8 2.2 2.2 2.9 1.9 2.9 3.2 3.6 1.1 1.2 2.1 2.6 1.4 1.5 1.6 1.6 2.4 2.5 0.5 0.5 1.5 1.5 2.9 3.3 3.7 3.9 4.0 4.7 3.5 4.0 3.5 4.0 3.1 3.2 3.3 3.6 2.2 2.6
Source: Bloomberg, KT ZMICO Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 6
ROE (%) 14E 15E 5.2 7.1 9.2 9.5 7.2 8.3 (0.2) 7.2 3.5
8.9 10.3 9.6
15.1 8.6 8.1 13.7 11.2 11.3
17.8 12.2 11.0 14.4 11.0 13.3
2.1 9.3 4.9 7.0 5.8
3.8 10.6 5.6 8.1 7.0
8.5 9.8 5.8 8.1
9.1 10.3 4.0 7.8
12.9 7.2 10.0 7.7
13.6 8.7 11.1 9.5
Financial tables PROFIT & LOSS (Btm) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Other income / exp. EBT Corporate tax Forex gain (loss) Extra Items Gain (loss) from affiliates Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btm) Cash and equivalents Accounts receivable Inventories PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Paid‐up shares Shareholder equity Total liab. & shareholder equity CASH FLOW (Btm) Net income Forex and other extraordinary adjustments Depreciation & amortization Change in working capital Cash flow from operations Capex (Invest)/Divest Others Cash flow from investing Debt financing (repayment) Equity financing Dividend payment Others Cash flow from financing Net change in cash Free cash flow FCF per share (Bt) PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2012 212,537 (71,219) 141,318 (34,319) 149,691 42,692 106,999 (5,812) 2,742 103,928 (42,120) (1,112) (3,525) 145 57,316 17.08 17.08 63,601 16.02 5.80
2013 224,973 (81,193) 143,780 (35,595) 158,537 50,351 108,186 (6,175) 2,911 104,922 (46,743) (3,041) 857 190 56,186 14.08 14.08 58,866 14.83 6.00
2012 70,205 31,876 9,916 336,058 153,458 601,513 5,010 110,562 273,409 3,970 328,104 601,513
2013 77,348 34,336 12,246 415,809 168,130 707,868 11,699 120,310 323,331 3,970 384,536 707,868
2012 57,316 1,112 42,692 (9,427) 91,693 (84,128)
2013 56,186 3,041 50,351 2,661 112,239 (130,371)
(84,128) (7,173) 90,372 (19,463) (43,896) 19,840 27,405 7,565 1.91
(130,371) 16,437 24,379 (23,943) 8,401 25,275 7,142 (18,132) (4.57)
2012 25.3 28.8 26.7 66.5 70.4 50.3 27.0 29.9 40.5
2013 5.9 5.9 (17.6) 63.9 70.5 48.1 25.0 26.2 44.5
2014 247,817 (121,856) 125,961 (37,343) 171,833 83,215 88,618 (8,434) 4,391 84,576 (35,536) 4,809 (32,471) 112 21,490 5.19 5.19 49,341 12.43 4.50 2014 129,746 26,316 13,060 379,320 219,545 767,986 24,696 114,695 354,366 3,970 413,620 767,986 2014 21,490 (4,809) 83,215 (1,581) 98,316 (46,780) (46,780) 7,383 26,339 (18,633) (14,226) 863 52,398 51,535 12.98 2014 10.2 8.4 (63.1) 50.8 69.3 35.8 8.7 19.9 42.0
2015E 198,771 (117,184) 81,587 (32,750) 130,373 81,536 48,837 (7,080) 3,500 45,257 (18,103) 0 3,009 150 30,313 7.64 7.64 27,304 6.88 3.50 2015E 136,227 20,149 12,842 432,937 211,259 813,414 72,894 96,288 383,364 3,970 430,050 813,414 2015E 30,313 0 81,536 4,153 116,003 (135,154) (135,154) 29,790 150 (13,884) 9,576 25,632 6,481 (19,151) (4.82) 2015E (19.8) (24.1) 47.1 41.0 65.6 24.6 15.3 13.7 40.0
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 5 of 6
2016E 215,407 (115,531) 99,876 (35,517) 143,929 79,570 64,359 (5,176) 3,500 62,683 (25,073) 743 0 150 38,502 9.70 9.70 37,760 9.51 3.69 2016E 143,038 21,836 12,661 448,751 204,083 830,369 70,081 95,500 376,447 3,970 453,921 830,369 2016E 38,502 (743) 79,570 (4,361) 112,969 (95,384) (95,384) (3,600) 150 (14,631) 7,308 (10,774) 6,811 17,585 4.43 2016E 8.4 10.4 27.0 46.4 66.8 29.9 17.9 17.5 40.0
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS BUY: Expecting positive total returns of 15% or more over the next 12 months OUTPERFORM: Expecting total returns between ‐10% to +15%; returns expected to exceed market return over six months period because of specific catalysts UNDERPERFORM: Expecting total returns between ‐10% to +15%; returns expected to below market return over six months period because of specific catalysts SELL: Expecting negative total returns of 10% or more over the next 12 months
SECTOR RECOMMENDATIONS OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to outperform the relevant primary market index by at least 10% over the next 12 months. NEUTRAL: The industry, as defined by the analyst's coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months. UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index by 10% over the next 12 months.
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 6 of 6
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KT•ZMICO Securities Company Limited
st
8 , 15 -17 , 19 , 21 Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok 10500 Telephone: (66-2) 695-5000
Phaholyothin Branch
rd
Fax. (66-2) 631-1709
Ploenchit Branch
th
nd
2
Sindhorn Branch
3 Floor, Shinnawatra Tower II,
8 Floor, Ton Son Tower,
1291/1 Phaholyothin Road,
900 Ploenchit Road, Lumpini,
Floor, Sindhorn Tower 1, 130-132 Wireless Road, Lumpini,
Phayathai, Bangkok 10400
Pathumwan, Bangkok 10330
Pathumwan, Bangkok 10330
Telephone: (66-2) 686-1500
Telephone: (66-2) 626-6000
Telephone: (66-2) 627-3550
Fax. (66-2) 686-1666
Fax. (66-2) 626-6111
Fax. (66-2) 627-3582, 627-3600
Nakhon Pathom Branch 1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
Chachoengsao Branch
Viphavadee Branch
Phitsanulok Branch
G Floor, Lao Peng Nguan 1 Bldg.,
Krung Thai Bank, Singhawat Branch
333 Soi Cheypuand, Viphavadee-Rangsit Road,
114 Singhawat Road,
Ladyao, Jatujak, Bangkok 10900
Muang, Phitsanulok 65000
Telephone: (66-2) 618-8500
Telephone: 083-490-2873
Fax. (66-2) 618-8569
th
Chonburi Branch
Pattaya Branch
108/34-36 Mahajakkrapad Road,
4 Floor, Forum Plaza Bldg.,
382/6-8 Moo 9, T. NongPrue,
T.Namuang, A.Muang,
870/52 Sukhumvit Road, T. Bangplasoy,
A. Banglamung, Cholburi 20260
Chachoengsao 24000
A. Muang, Cholburi 20000
Telephone: (038) 362-420-9
Telephone: (038) 813-088
Telephone: (038) 287-635
Fax. (038) 362-430
Fax. (038) 813-099
Fax. (038) 287-637
Khon Kaen Branch
5th Floor, Charoen Thani Princess Hotel,
Hat Yai Branch
Sriworajak Building Branch
200/301 Juldis Hatyai Plaza Floor 3,
1st – 2nd Floor, Sriworajak Building, 222
260 Srichan Road, T. Naimuang,
Niphat-Uthit 3 Rd,
Luang Road, Pomprab,
A. Muang, Khon Kaen 40000
Hatyai Songkhla 90110
Bankgok 10100
Telephone: (043) 389-171-193
Telephone: (074) 355-530-3
Telephone: (02) 689-3100
Fax. (043) 389-209
Fax: (074) 355-534
Fax. (02) 689-3199
Central World Branch
Chiang Mai Branch
Phuket Branch
999/9 The Offices at Central World,
422/49 Changklan Road, Changklan
22/61-63, Luang Por Wat Chalong Road,
16th Fl., Rama 1 Rd, Pathumwan,
Subdistrict, Amphoe Meuang,
Talat Yai, Mueang Phuket,
Bangkok 10330
Chiang Mai 50100
Phuket 83000
Telephone: (66-2) 673-5000,
Telephone: (053) 270-072
Tel. (076) 222-811,(076) 222-683
(66-2) 264-5888 Fax. (66-2) 264-5899
Fax: (053) 272-618
Fax. (076) 222-861
Pak Chong Branch
Cyber Branch @ North Nana
173 175, Mittapap Road,
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd.,Klong Toey Nua Subdistrict , Wattana District, Bangkok 10110 Telephone: 083-490-2871
Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Tel. (044) 279-511 Fax. (044) 279-574
Nakhon Ratchasima Branch
Bangkhae Branch
6th Floor The Mall Group Building Bangkhae 275 Moo 1 Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Tel. (66-2) 454-9979 Fax. (66-2) 454-9970
624/9 Changphuek Road, . Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171 Information herein was obtained from sources believed to be reliable, but its completeness and accuracy are not guaranteed. All opinions expressed constitute our views on that date and are not intended as an offer or solicitation to sell or buy any securities. Investors should exercise care when making a decision to invest in securities. No one may modify or distribute any part of this report unless written permission is first received from Seamico Securities Plc. If any modifications are made, quotes or references taken from the report and the report date must be clearly mentioned and must not cause misunderstanding or damage to the company.
Company Update
Close Bt114.50
Energy
Earnings upgrade/ Earnings downgrade/Overview unchanged
April 10, 2015
Challenging quarter
FY15
FY16
Consensus EPS (Bt)
8.710
9.857
KT ZMICO vs. consensus Share data
‐12.3%
‐1.6%
Reuters / Bloomberg
PTTEP.BK/PTTEP TB
Paid‐up Shares (m)
3,969.99
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
455.00/13,964.00
Foreign limit / actual (%)
40.00/20.72
52 week High / Low (Bt)
172.50/99.75
Avg. daily T/O (shares 000) NVDR (%)
5,867.00 4.04
Estimated free float (%)
34.68
Beta
1.55
URL
www.pttep.com
CGR
Patcharin Karsemarnuntana Analyst, no 17834 [email protected] 66 (0) 2695‐5837
Lack of positive catalysts Despite the lower risk on PTTEP’s poor asset quality going forward after the huge impairment loss charged in 4Q14, we see no earnings acceleration in 1H15E (likely to drop sharply YoY) given sustained high unit costs against the lower ASP. Thus, we maintain our “Underperform” rating for PTTEP even though its current 1.1x 2015E PBV is trading at the lower bound zone of ‐2.0SD. Expected to deliver Bt5.6bn NP in 1Q15E PTTEP’s 1Q15E earnings reflect its operation line with negligible non‐ recurring items; NP is projected at Bt5.6bn (‐55% YoY, but reversing from a net loss in 4Q14) and core profit is projected at Bt6.4bn (‐49% YoY, +56% QoQ). The weak operation YoY is largely blamed on the lower ASP and higher unit costs. Meanwhile, the improving core profit QoQ is mostly attributable to the minimal US$3mn write‐off expenses on dry wells (vs. US$103mn in 4Q14) despite the smaller sales volume and the lower ASP. 2015‐16E NP maintained We see no earnings acceleration in 2Q15E given the expected flat sales volume (with the volume resumption from Contract 4 to be offset by the lower gas volume from the 13‐day planned shutdown in Myanmar fields). We maintain our 2015‐16E NP of Bt30.3bn and Bt38.5bn, respectively, calling 34% CAGR from its low base in 2014 (due to the huge impairment loss). Meanwhile, its 2015‐16E core profit is projected to drop 13% CAGR, mainly due to lower ASP to US$47.5‐52.6/boe following the de‐based oil price and the lag time of the declining gas price despite the growth cycle of its sales volume to 342‐343 kboe/d in the period. Maintain our cautious view on oil prices in 2015E We maintain our cautious view on oil prices in 2015E with a Dubai price assumption of US$50/bbl (YTD US$52/bbl). The supply glut should continue given the seasonal low crude demand in 2Q following the planned shutdowns of refineries (especially in Asia) and record‐high oil production by Saudi Arabia (to 10.3mbd in Mar‐2015). Moreover, supply would also be impacted by the lifting of sanctions on Iran’s oil exports should a comprehensive agreement between Iran and the six major powers on the Iranian nuclear program be reached by end‐Jun (after a nuclear deal framework was agreed upon at end‐Mar). Financial and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2012 212,537 57,316 17.08 26.7% 5.80 82.65 2012 6.70 3.34 1.39 5.1% 21.7% 13.8%
2013 224,973 56,186 14.08 ‐17.6% 6.00 96.86 2013 8.13 3.21 1.18 5.2% 15.8% 14.2%
2014 247,817 21,490 5.19 ‐63.1% 4.50 104.19 2014 22.06 2.70 1.10 3.9% 5.4% 2.3%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 6
2015E 198,771 30,313 7.64 47.1% 3.50 108.33 2015E 15.00 3.74 1.06 3.1% 7.2% 7.7%
2016E 215,407 38,502 9.70 27.0% 3.69 114.34 2016E 11.81 3.31 1.00 3.2% 8.7% 5.0%
Expected to deliver Bt5.6bn NP in 1Q15E PTTEP’s 1Q15E earnings reflect its operation line with negligible non‐recurring items; NP is projected at Bt5.6bn (‐55% YoY, but reversing from a net loss in 4Q14) and core profit is projected at Bt6.4bn (‐49% YoY, +56% QoQ). The weak operation YoY is largely blamed on 1) the lower ASP to US$49/boe (‐24% YoY in line with declining liquid price); and 2) higher unit costs to US41.6/boe (+11% YoY with higher depreciation expenses as the main cause given the larger sales volume from Montara YoY and the higher provision on decommission costs). Meanwhile, the improving core profit QoQ is mostly attributable to the minimal US$3mn write‐off expenses on dry wells (vs. US$103mn in 4Q14) despite the lower sales volume to 326kboe/d (‐6% QoQ due to a smaller sales volume contribution from Montara and Contract 4, with the latter having a 16‐day planned shutdown linked to the field itself and to Erawan’s gas station with the gas pipeline connected to the field) and the lower ASP to US$49/boe (‐13% QoQ). Figure 1: PTTEP’s 1Q15E earnings preview Profit and Loss (Btmn)
Year‐end 31 Dec
Revenue Gross profit EBITDA Interest expense Other income Income tax Forex gain (loss) Other extraordinary items Gn (Ls) from affiliates Minority interests Net profit (loss) Core profit (loss) Reported EPS (Bt) Gross margin (%) EBITDA margin (%) Net margin (%) Current ratio (x) Interest coverage (x) Debt / equity (x) BVPS (Bt) ROE (%)
% YoY
YTD (%15E)
(19.8) (35.2) (24.1) (16.1) (20.3) (49.1) (100.0) nm 33.5 nm 41.1 (44.7) 47.1
24.3 22.6 26.2 27.3 15.7 15.6 nm ‐ 20.0 nm 18.5 23.5 18.5
1Q14
4Q14
1Q15E
% YoY
% QoQ
2014
2015E
59,192 33,114 41,441 (1,845) 487 (11,184) (164) ‐ (4) ‐ 12,435 12,599 3.12 55.94 70.01 21.01 1.93 13.63 0.34 95.52 13.02
60,348 24,458 39,502 (2,692) 917 (8,170) 4,237 (32,731) 29 ‐ (24,415) 4,117 (6.34) 40.53 65.46 (40.46) 1.94 5.20 0.34 104.19 (23.12)
48,379 18,413 34,093 (1,936) 550 (2,822) (816) ‐ 30 ‐ 5,607 6,424 1.41 38.06 70.47 11.59 2.00 5.48 0.27 105.60 5.39
(18.3) (44.4) (17.7) 4.9 12.8 (74.8) 396.3 nm nm nm (54.9) (49.0) (54.7)
(19.8) (24.7) (13.7) (28.1) (40.0) (65.5) nm (100.0) 5.2 nm nm 56.0 nm
247,817 125,961 171,833 (8,434) 4,391 (35,536) 4,809 (32,471) 112 ‐ 21,490 49,341 5.19 50.83 69.34 8.67 1.94 10.51 0.34 104.19 5.39
198,771 81,587 130,373 (7,080) 3,500 (18,103) ‐ 3,009 150 ‐ 30,313 27,304 7.64 41.05 65.59 15.25 1.31 6.90 0.39 108.33 7.19
Source: KT ZMICO Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 6
Figure 2: PTTEP’s quarterly operational data A) PTTEP’s quarterly petroleum sales volume
Source: Bloomberg, KT ZMICO Research
B) PTTEP’s quarterly ASP and gross profit margin
Source: Bloomberg, KT ZMICO Research
Figure 3: PTTEP’s PBV band and its correlation to oil prices A) PTTEP’s PBV band
Source: Bloomberg, KT ZMICO Research
B) PTTEP share price in correlation to the crude oil price
Source: Bloomberg, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 6
Figure 4: PTTEP’s valuation comparison with regional peers
A) PTTEP’s 2015E PBV and ROE comparison with regional peers
B) PTTEP’s 2015E PBV/ROE comparison with regional peers
Source: Bloomberg, KT ZMICO Research
Figure 5: PTTEP’s valuation comparison with regional peers NAME PETROCHINA CO LTD‐H SINOPEC SHANGHAI PETROCHEM‐H CHINA CITIC RESOURCES HOLDINGS LTD CNOOC LTD HONG KONG BHARAT PETROLEUM CORP LTD HINDUSTAN PETROLEUM CORP INDIAN OIL CORP LTD OIL & NATURAL GAS CORP LTD RELIANCE INDUSTRIES LTD INDIA HANWHA CHEMICAL CORP LG CHEM LTD SK INNOVATION CO LTD LOTTE CHEMICAL CORP S. KOREA FORMOSA PLASTICS CORP NAN YA PLASTICS CORP FAR EASTERN NEW CENTURY CORP TAIWAN PTT PCL PTT EXPLOR & PROD PUBLIC CO THAILAND AVERAGE
Mkt Cap (US$Mn) 437,655 11,163 1,411 68,785 9,445 3,621 14,644 42,563 46,638 2,194 15,406 9,394 7,325 15,542 17,656 5,513 29,140 13,968
PER (x) 14E 15E 24.2 15.0 22.6 20.0 23.4 17.5
PBV (x) 14E 15E 1.5 1.4 2.5 2.3 2.0 1.9
EV/EBITDA (x) 14E 15E 9.6 8.0 14.7 14.2 12.2 11.1
#N/A 17.7 17.7
10.7 10.5 10.6
1.0 1.3 1.2
0.9 1.2 1.1
14.2 4.7 9.4
7.2 3.8 5.5
18.5 16.9 15.2 10.6 12.0 14.7
14.0 11.6 10.8 9.2 11.3 11.4
2.8 1.5 1.3 1.4 1.3 1.7
2.5 1.4 1.2 1.3 1.2 1.5
11.8 11.1 12.1 5.1 9.5 9.9
9.5 9.5 8.5 4.6 8.3 8.1
26.2 15.0 13.7 16.8 17.9
14.7 12.1 11.2 13.5 12.9
0.6 1.4 0.7 1.2 0.9
0.5 1.3 0.6 1.1 0.9
11.3 6.7 9.6 8.3 9.0
10.0 6.0 8.6 7.5 8.0
20.6 18.0 17.6 18.7
18.2 16.2 16.6 17.0
1.7 1.7 0.8 1.4
1.7 1.7 0.8 1.4
26.6 17.7 11.9 18.7
25.2 16.3 10.9 17.5
10.0 15.0 12.5 17.5
8.7 11.8 10.2 13.3
1.2 1.1 1.1 1.4
1.1 1.0 1.1 1.3
5.0 3.7 4.4 10.6
4.2 3.3 3.7 9.0
YLD (%) 14E 15E 1.5 2.3 0.9 1.0 1.2 1.6 ‐ ‐ 1.8 2.5 1.8 2.5 1.8 2.2 2.2 2.9 1.9 2.9 3.2 3.6 1.1 1.2 2.1 2.6 1.4 1.5 1.6 1.6 2.4 2.5 0.5 0.5 1.5 1.5 2.9 3.3 3.7 3.9 4.0 4.7 3.5 4.0 3.5 4.0 3.1 3.2 3.3 3.6 2.2 2.6
Source: Bloomberg, KT ZMICO Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 6
ROE (%) 14E 15E 5.2 7.1 9.2 9.5 7.2 8.3 (0.2) 7.2 3.5
8.9 10.3 9.6
15.1 8.6 8.1 13.7 11.2 11.3
17.8 12.2 11.0 14.4 11.0 13.3
2.1 9.3 4.9 7.0 5.8
3.8 10.6 5.6 8.1 7.0
8.5 9.8 5.8 8.1
9.1 10.3 4.0 7.8
12.9 7.2 10.0 7.7
13.6 8.7 11.1 9.5
Financial tables PROFIT & LOSS (Btm) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Other income / exp. EBT Corporate tax Forex gain (loss) Extra Items Gain (loss) from affiliates Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btm) Cash and equivalents Accounts receivable Inventories PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Paid‐up shares Shareholder equity Total liab. & shareholder equity CASH FLOW (Btm) Net income Forex and other extraordinary adjustments Depreciation & amortization Change in working capital Cash flow from operations Capex (Invest)/Divest Others Cash flow from investing Debt financing (repayment) Equity financing Dividend payment Others Cash flow from financing Net change in cash Free cash flow FCF per share (Bt) PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2012 212,537 (71,219) 141,318 (34,319) 149,691 42,692 106,999 (5,812) 2,742 103,928 (42,120) (1,112) (3,525) 145 57,316 17.08 17.08 63,601 16.02 5.80
2013 224,973 (81,193) 143,780 (35,595) 158,537 50,351 108,186 (6,175) 2,911 104,922 (46,743) (3,041) 857 190 56,186 14.08 14.08 58,866 14.83 6.00
2012 70,205 31,876 9,916 336,058 153,458 601,513 5,010 110,562 273,409 3,970 328,104 601,513
2013 77,348 34,336 12,246 415,809 168,130 707,868 11,699 120,310 323,331 3,970 384,536 707,868
2012 57,316 1,112 42,692 (9,427) 91,693 (84,128)
2013 56,186 3,041 50,351 2,661 112,239 (130,371)
(84,128) (7,173) 90,372 (19,463) (43,896) 19,840 27,405 7,565 1.91
(130,371) 16,437 24,379 (23,943) 8,401 25,275 7,142 (18,132) (4.57)
2012 25.3 28.8 26.7 66.5 70.4 50.3 27.0 29.9 40.5
2013 5.9 5.9 (17.6) 63.9 70.5 48.1 25.0 26.2 44.5
2014 247,817 (121,856) 125,961 (37,343) 171,833 83,215 88,618 (8,434) 4,391 84,576 (35,536) 4,809 (32,471) 112 21,490 5.19 5.19 49,341 12.43 4.50 2014 129,746 26,316 13,060 379,320 219,545 767,986 24,696 114,695 354,366 3,970 413,620 767,986 2014 21,490 (4,809) 83,215 (1,581) 98,316 (46,780) (46,780) 7,383 26,339 (18,633) (14,226) 863 52,398 51,535 12.98 2014 10.2 8.4 (63.1) 50.8 69.3 35.8 8.7 19.9 42.0
2015E 198,771 (117,184) 81,587 (32,750) 130,373 81,536 48,837 (7,080) 3,500 45,257 (18,103) 0 3,009 150 30,313 7.64 7.64 27,304 6.88 3.50 2015E 136,227 20,149 12,842 432,937 211,259 813,414 72,894 96,288 383,364 3,970 430,050 813,414 2015E 30,313 0 81,536 4,153 116,003 (135,154) (135,154) 29,790 150 (13,884) 9,576 25,632 6,481 (19,151) (4.82) 2015E (19.8) (24.1) 47.1 41.0 65.6 24.6 15.3 13.7 40.0
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 5 of 6
2016E 215,407 (115,531) 99,876 (35,517) 143,929 79,570 64,359 (5,176) 3,500 62,683 (25,073) 743 0 150 38,502 9.70 9.70 37,760 9.51 3.69 2016E 143,038 21,836 12,661 448,751 204,083 830,369 70,081 95,500 376,447 3,970 453,921 830,369 2016E 38,502 (743) 79,570 (4,361) 112,969 (95,384) (95,384) (3,600) 150 (14,631) 7,308 (10,774) 6,811 17,585 4.43 2016E 8.4 10.4 27.0 46.4 66.8 29.9 17.9 17.5 40.0
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS BUY: Expecting positive total returns of 15% or more over the next 12 months OUTPERFORM: Expecting total returns between ‐10% to +15%; returns expected to exceed market return over six months period because of specific catalysts UNDERPERFORM: Expecting total returns between ‐10% to +15%; returns expected to below market return over six months period because of specific catalysts SELL: Expecting negative total returns of 10% or more over the next 12 months
SECTOR RECOMMENDATIONS OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to outperform the relevant primary market index by at least 10% over the next 12 months. NEUTRAL: The industry, as defined by the analyst's coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months. UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index by 10% over the next 12 months.
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 6 of 6
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KT•ZMICO Securities Company Limited
st
8 , 15 -17 , 19 , 21 Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok 10500 Telephone: (66-2) 695-5000
Phaholyothin Branch
rd
Fax. (66-2) 631-1709
Ploenchit Branch
th
nd
2
Sindhorn Branch
3 Floor, Shinnawatra Tower II,
8 Floor, Ton Son Tower,
1291/1 Phaholyothin Road,
900 Ploenchit Road, Lumpini,
Floor, Sindhorn Tower 1, 130-132 Wireless Road, Lumpini,
Phayathai, Bangkok 10400
Pathumwan, Bangkok 10330
Pathumwan, Bangkok 10330
Telephone: (66-2) 686-1500
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Fax. (66-2) 686-1666
Fax. (66-2) 626-6111
Fax. (66-2) 627-3582, 627-3600
Nakhon Pathom Branch 1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
Chachoengsao Branch
Viphavadee Branch
Phitsanulok Branch
G Floor, Lao Peng Nguan 1 Bldg.,
Krung Thai Bank, Singhawat Branch
333 Soi Cheypuand, Viphavadee-Rangsit Road,
114 Singhawat Road,
Ladyao, Jatujak, Bangkok 10900
Muang, Phitsanulok 65000
Telephone: (66-2) 618-8500
Telephone: 083-490-2873
Fax. (66-2) 618-8569
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Chonburi Branch
Pattaya Branch
108/34-36 Mahajakkrapad Road,
4 Floor, Forum Plaza Bldg.,
382/6-8 Moo 9, T. NongPrue,
T.Namuang, A.Muang,
870/52 Sukhumvit Road, T. Bangplasoy,
A. Banglamung, Cholburi 20260
Chachoengsao 24000
A. Muang, Cholburi 20000
Telephone: (038) 362-420-9
Telephone: (038) 813-088
Telephone: (038) 287-635
Fax. (038) 362-430
Fax. (038) 813-099
Fax. (038) 287-637
Khon Kaen Branch
5th Floor, Charoen Thani Princess Hotel,
Hat Yai Branch
Sriworajak Building Branch
200/301 Juldis Hatyai Plaza Floor 3,
1st – 2nd Floor, Sriworajak Building, 222
260 Srichan Road, T. Naimuang,
Niphat-Uthit 3 Rd,
Luang Road, Pomprab,
A. Muang, Khon Kaen 40000
Hatyai Songkhla 90110
Bankgok 10100
Telephone: (043) 389-171-193
Telephone: (074) 355-530-3
Telephone: (02) 689-3100
Fax. (043) 389-209
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Fax. (02) 689-3199
Central World Branch
Chiang Mai Branch
Phuket Branch
999/9 The Offices at Central World,
422/49 Changklan Road, Changklan
22/61-63, Luang Por Wat Chalong Road,
16th Fl., Rama 1 Rd, Pathumwan,
Subdistrict, Amphoe Meuang,
Talat Yai, Mueang Phuket,
Bangkok 10330
Chiang Mai 50100
Phuket 83000
Telephone: (66-2) 673-5000,
Telephone: (053) 270-072
Tel. (076) 222-811,(076) 222-683
(66-2) 264-5888 Fax. (66-2) 264-5899
Fax: (053) 272-618
Fax. (076) 222-861
Pak Chong Branch
Cyber Branch @ North Nana
173 175, Mittapap Road,
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd.,Klong Toey Nua Subdistrict , Wattana District, Bangkok 10110 Telephone: 083-490-2871
Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Tel. (044) 279-511 Fax. (044) 279-574
Nakhon Ratchasima Branch
Bangkhae Branch
6th Floor The Mall Group Building Bangkhae 275 Moo 1 Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Tel. (66-2) 454-9979 Fax. (66-2) 454-9970
624/9 Changphuek Road, . Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171 Information herein was obtained from sources believed to be reliable, but its completeness and accuracy are not guaranteed. All opinions expressed constitute our views on that date and are not intended as an offer or solicitation to sell or buy any securities. Investors should exercise care when making a decision to invest in securities. No one may modify or distribute any part of this report unless written permission is first received from Seamico Securities Plc. If any modifications are made, quotes or references taken from the report and the report date must be clearly mentioned and must not cause misunderstanding or damage to the company.
