PTT Exploration and Production
PTT Exploration and Production Underperform (15E TP Bt116.00)
Company Update
Close Bt103.00
Energy
Earnings upgrade/ Earnings downgrade/ Overview unchanged
July 9, 2015
Downbeat 2Q15E earnings
FY15
FY16
Consensus EPS (Bt)
7.834
9.139
KT ZMICO vs. consensus Share data
‐36.4%
‐14.8%
Reuters / Bloomberg
PTTEP.BK/PTTEP TB
Paid‐up Shares (m)
3,969.99
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
409.00/12,049.00
Foreign limit / actual (%)
40.00/19.85
52 week High / Low (Bt)
172.50/99.75
Avg. daily T/O (shares 000) NVDR (%)
6,167.00 3.92
Estimated free float (%)
34.68
Beta
1.72
URL
www.pttep.com
CGR
Patcharin Karsemarnuntana Analyst, no 17834 [email protected] 66 (0) 2695‐5837
Lack of positive catalysts; “Underperform” maintained We cut PTTEP’s earnings and TP given the downbeat 2Q15E earnings and no earnings acceleration in 2H15E. Thus, we maintain our “Underperform” rating for PTTEP due to the lack of positive catalysts to drive its share price in the next six months, regardless of its 2015E PBV currently trading at 0.96x in the lower bound zone (‐2SD). Downbeat 2Q15E earnings with slim NP of Bt110mn We expect PTTEP to post poor NP of Bt110mn in 2Q15E (‐99% YoY, ‐99% QoQ), largely blamed on a smaller margin and higher tax expenses, along with forex loss (US$20mn) and oil hedging loss (US$50mn). Meanwhile, we expect its 2Q15E core profit at Bt2.4bn, negatively pressured by 1) lower sales volume to 325 kboe/d (‐1% QoQ), mainly due to the smaller gas volume contribution from Myanmar fields due to planned shutdowns; 2) weakening ASP to US$47.7/boe (‐2% QoQ) with a lower gas price as the main weakness following the lag time effect from the declining oil price; 3) higher unit costs to US$43.3/boe (+8% QoQ), particularly in the case of depreciation expenses and write‐off expenses on dry wells (US$25mn mainly from onshore wells in Myanmar), and 4) higher tax expenses by US$73mn, mainly due to higher deferred tax liability following baht depreciation against the USD. Downward revision on 2015‐16E earnings Given the expected poor 2Q15E earnings and no earnings catalysts in 2H15E, particularly in 4Q15E with a downward adjustment on the gas price to be done on nearly all projects, we cut our 2015‐16E NP by 36% and 16%, respectively, to reflect 1) the cut in 2015‐16E ASP by 6‐7%, mainly from the downward revision on the gas price; and 2) a realized oil hedging loss. We also revise down our 2015E DCF‐based TP to Bt116/share (from Bt122 earlier). Non‐recurring items to be a source of downside risk to its earnings Given the company’s policy to have 70‐80% of liquid volume hedged mostly under “zero cost collar”, this exposure would be a source of downside risk to its earnings, particularly in the case of a reversal of the oil price trend against expectations. Meanwhile, baht depreciation against the USD would also lead to larger tax expenses for the company following higher deferred tax liability. Financials 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 6.03 3.03 1.25 5.6% 21.7% 13.8%
2013 224,973 56,186 14.08 ‐17.6% 6.00 96.86 2013 7.32 2.92 1.06 5.8% 15.8% 14.2%
2014 247,817 21,490 5.19 ‐63.1% 4.50 104.19 2014 19.85 2.44 0.99 4.4% 5.4% 2.4%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 6
2015E 193,009 19,771 4.98 ‐4.0% 2.28 106.89 2015E 20.68 3.61 0.96 2.2% 4.7% 11.0%
2016E 205,310 30,929 7.79 56.4% 2.96 111.72 2016E 13.22 3.25 0.92 2.9% 7.1% 8.3%
Figure 1: PTTEP’s 2Q15E earnings preview Profit and Loss Year‐end 31 Dec
Revenue Gross profit EBITDA Interest expense Other income Income tax Forex gain (loss) Extraordinary Items Gn (Ls) from affiliates 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 (%)
2Q14
1Q15
2Q15E
% YoY
64,255 35,374 45,740 (1,894) 2,213 (7,581) (523) 260 36 18,187 18,600 4.57 55.05 71.18 28.30 2.76 13.56 0.32 108.33 17.98
48,005 18,342 35,382 (2,240) 628 (583) (887) ‐ 86 8,616 9,503 2.16 38.21 73.70 17.95 1.96 5.18 0.33 103.27 8.37
47,544 15,963 32,028 (2,267) (1,113) (3,653) (665) ‐ 70 110 2,439 0.03 33.57 67.36 0.23 1.90 3.41 0.28 101.80 0.11
(26.0) (54.9) (30.0) 19.7 nm (51.8) 27.2 (100.0 92.7 (99.4) (86.9) (99.4)
% QoQ (1.0) (13.0) (9.5) 1.2 nm 526.9 (25.0) nm (18.1) (98.7) (74.3) (98.7)
1H15E
% YoY
2015E
95,550 34,305 67,409 (4,507) (485) (4,236) (1,552) ‐ 156 8,726 11,942 2.19 35.90 70.55 9.13 1.90 4.29 0.28 101.80 4.32
(22.6) (49.9) (22.7) 20.5 nm (77.4) 126.3 (100.0 239.6 (71.5) (61.7) (71.6)
193,009 65,377 126,303 (7,153) 3,500 (8,935) (401) (825) 150 19,771 20,997 4.98 33.87 65.44 10.24 1.29 4.67 0.43 106.89 4.72
% YoY (22.1) (48.1) (26.5) (15.2) (20.3) (74.9) nm (97.5) 33.5 (8.0) (57.4) (4.0)
YTD (% 15E) 49.5 52.5 53.4 63.0 (13.9) 47.4 386.7 ‐ 103.7 44.1 56.9 43.9
Source: KT ZMICO Research
Figure 2: PTTEP’s quarterly operational data A) PTTEP’s quarterly petroleum sales volume
Source: Company, KT ZMICO Research
B) PTTEP’s quarterly ASP and gross profit margin
Source: Company, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 6
Figure 3: 2015‐16E earnings revision
Petroleum sales volume (boe/d) Dubai (US$/bbl) Average selling price (US$/boe)
New 2015E 332,001 60 47.1
Sales (Btmn) EBITDA (Btmn) Core profit (Btmn) Net profit (Btmn) EPS (Bt) 2015E DCF‐based TP (Bt)
193,009 126,303 20,997 19,771 4.98 116
2016E 342,141 65 48.7 205,310 137,083 30,929 30,929 7.79
Old 2015E 332,001 60 50.8 208,463 136,559 28,176 30,688 7.73 122
2016E 342,141 65 51.6 218,019 145,663 36,936 36,936 9.3
% chg from old 2015E 2016E 0.0 0.0 0.0 0.0 ‐7.2 ‐5.6 ‐7.4 ‐7.5 ‐25.5 ‐35.6 ‐35.6 ‐4.6
‐5.8 ‐5.9 ‐16.3 ‐16.3 ‐16.3
Source: KT ZMICO Research
Figure 4: PTTEP’s PBV band and its correlation to oil prices A) PTTEP’s PBV band
Source: Bloomberg, KT ZMICO Research
B) PTTEP share price in correlation to the crude oil price
Source: Bloomberg, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 6
Figure 5: PTTEP’s valuation comparison with regional peers
A) PTTEP’s 2015E PBV and ROE comparison with regional peers
B) PTTEP’s 2015E PBV/ROE comparison with regional peers
Source: Bloomberg, KT ZMICO Research
Figure 6: PTTEP’s valuation comparison with regional peers NAME PETROCHINA CO LTD‐H SINOPEC SHANGHAI PETROCHEM‐H CHINA CITIC RESOURCES HOLDINGS LTD CNOOC LTD HONG KONG BHARAT PETROLEUM CORP LTD HINDUSTAN PETROLEUM CORP INDIAN OIL CORP LTD OIL & NATURAL GAS CORP LTD RELIANCE INDUSTRIES LTD INDIA HANWHA CHEMICAL CORP LG CHEM LTD SK INNOVATION CO LTD LOTTE CHEMICAL CORP S. KOREA FORMOSA PLASTICS CORP NAN YA PLASTICS CORP FAR EASTERN NEW CENTURY CORP TAIWAN PTT PCL PTT EXPLOR & PROD PUBLIC CO THAILAND AVERAGE
Mkt Cap (US$Mn) 428,343 10,861 1,390 55,511 10,423 4,386 16,398 40,759 50,674 2,493 13,788 8,785 7,599 14,342 17,332 5,397 28,571 12,030
PER (x) 15E 16E 19.2 12.3 11.4 10.6 15.3 11.5
PBV (x) 15E 16E 1.2 1.2 1.5 1.4 1.3 1.3
EV/EBITDA (x) 15E 16E 9.7 8.2 13.3 12.9 11.5 10.6
n.a. 14.3 14.3
10.5 8.6 9.6
1.0 1.1 1.0
0.9 1.0 1.0
9.2 4.0 6.6
5.2 3.2 4.2
13.0 12.6 11.1 9.7 12.3 11.7
12.2 11.0 10.1 8.4 10.2 10.4
2.6 1.8 1.3 1.3 1.3 1.7
2.2 1.6 1.2 1.2 1.2 1.5
7.8 8.1 7.3 4.8 9.8 7.5
7.2 7.3 6.5 4.3 7.9 6.7
23.4 12.6 8.3 10.9 13.8
13.5 10.7 8.3 10.3 10.7
0.6 1.3 0.6 1.2 0.9
0.6 1.2 0.6 1.1 0.9
11.2 5.6 7.3 6.0 7.5
9.9 5.1 7.1 5.9 7.0
18.0 16.4 16.8 17.0
16.1 15.4 16.2 15.9
1.5 1.6 0.7 1.3
1.5 1.5 0.6 1.2
23.0 14.4 11.7 16.4
22.0 14.0 11.2 15.8
9.8 20.7 15.2 14.6
8.8 13.2 11.0 11.5
1.3 1.0 1.1 1.2
1.1 0.9 1.0 1.1
4.7 3.6 4.2 9.0
3.9 3.3 3.6 7.9
YLD (%) 15E 16E 1.9 2.7 1.8 1.9 1.9 2.3 ‐ ‐ 2.2 3.2 2.2 3.2 2.3 2.4 2.9 3.1 2.5 2.9 3.6 3.9 1.1 1.2 2.5 2.7 1.0 1.2 1.8 1.8 2.4 2.6 0.5 0.5 1.4 1.5 3.4 3.7 3.8 4.0 4.2 4.6 3.8 4.1 3.6 4.0 2.2 2.9 2.9 3.4 2.4 2.9
Source: Bloomberg, KT ZMICO Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 6
ROE (%) 15E 16E 5.0 7.0 11.0 10.6 8.0 8.8 (0.2) 7.0 3.4
9.1 10.3 9.7
20.7 13.8 12.4 14.0 11.1 14.4
19.3 14.3 12.3 14.8 12.1 14.6
2.8 10.3 7.8 11.4 8.1
4.6 11.1 7.3 10.8 8.5
8.7 9.5 5.6 7.9
9.1 9.7 3.3 7.4
13.5 4.7 9.1 8.5
13.6 7.1 10.4 9.9
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
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
2015E 193,009 (127,632) 65,377 (31,942) 126,303 92,868 33,435 (7,153) 3,500 29,782 (8,935) (401) (825) 150 19,771 4.98 4.98 20,997 5.29 2.28
2016E 205,310 (125,608) 79,702 (33,965) 137,083 91,346 45,736 (5,266) 3,500 43,970 (13,191) 0 0 150 30,929 7.79 7.79 30,929 7.79 2.96
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
2014 129,562 26,316 13,060 378,612 220,057 767,607 24,696 114,695 353,988 3,970 413,620 767,607
2015E 136,034 21,152 15,735 423,141 216,546 812,608 85,672 97,075 388,273 3,970 424,336 812,608
2016E 142,836 22,500 15,486 430,190 213,856 824,868 82,698 97,075 381,356 3,970 443,512 824,868
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)
2014 21,490 (4,809) 83,215 (1,678) 98,218 (46,849)
2015E 19,771 401 92,868 (7,511) 105,529 (137,397)
2016E 30,929 0 91,346 (4,871) 117,405 (98,396)
(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)
(46,849) 7,383 26,339 (18,633) (14,243) 845 52,215 51,370 12.94
(137,397) 43,356 150 (9,055) 3,889 38,340 6,472 ‐31,868 ‐8.03
(98,396) (2,975) 150 (11,753) 2,371 (12,207) 6,802 19,009 4.79
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 10.2 8.4 (63.1) 50.8 69.3 35.8 8.7 19.9 42.0
2015E (22.1) (26.5) (4.0) 33.9 65.4 17.3 10.2 10.9 30.0
2016E 6.4 8.5 56.4 38.8 66.8 22.3 15.1 15.1 30.0
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 5 of 6
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 Bt103.00
Energy
Earnings upgrade/ Earnings downgrade/ Overview unchanged
July 9, 2015
Downbeat 2Q15E earnings
FY15
FY16
Consensus EPS (Bt)
7.834
9.139
KT ZMICO vs. consensus Share data
‐36.4%
‐14.8%
Reuters / Bloomberg
PTTEP.BK/PTTEP TB
Paid‐up Shares (m)
3,969.99
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
409.00/12,049.00
Foreign limit / actual (%)
40.00/19.85
52 week High / Low (Bt)
172.50/99.75
Avg. daily T/O (shares 000) NVDR (%)
6,167.00 3.92
Estimated free float (%)
34.68
Beta
1.72
URL
www.pttep.com
CGR
Patcharin Karsemarnuntana Analyst, no 17834 [email protected] 66 (0) 2695‐5837
Lack of positive catalysts; “Underperform” maintained We cut PTTEP’s earnings and TP given the downbeat 2Q15E earnings and no earnings acceleration in 2H15E. Thus, we maintain our “Underperform” rating for PTTEP due to the lack of positive catalysts to drive its share price in the next six months, regardless of its 2015E PBV currently trading at 0.96x in the lower bound zone (‐2SD). Downbeat 2Q15E earnings with slim NP of Bt110mn We expect PTTEP to post poor NP of Bt110mn in 2Q15E (‐99% YoY, ‐99% QoQ), largely blamed on a smaller margin and higher tax expenses, along with forex loss (US$20mn) and oil hedging loss (US$50mn). Meanwhile, we expect its 2Q15E core profit at Bt2.4bn, negatively pressured by 1) lower sales volume to 325 kboe/d (‐1% QoQ), mainly due to the smaller gas volume contribution from Myanmar fields due to planned shutdowns; 2) weakening ASP to US$47.7/boe (‐2% QoQ) with a lower gas price as the main weakness following the lag time effect from the declining oil price; 3) higher unit costs to US$43.3/boe (+8% QoQ), particularly in the case of depreciation expenses and write‐off expenses on dry wells (US$25mn mainly from onshore wells in Myanmar), and 4) higher tax expenses by US$73mn, mainly due to higher deferred tax liability following baht depreciation against the USD. Downward revision on 2015‐16E earnings Given the expected poor 2Q15E earnings and no earnings catalysts in 2H15E, particularly in 4Q15E with a downward adjustment on the gas price to be done on nearly all projects, we cut our 2015‐16E NP by 36% and 16%, respectively, to reflect 1) the cut in 2015‐16E ASP by 6‐7%, mainly from the downward revision on the gas price; and 2) a realized oil hedging loss. We also revise down our 2015E DCF‐based TP to Bt116/share (from Bt122 earlier). Non‐recurring items to be a source of downside risk to its earnings Given the company’s policy to have 70‐80% of liquid volume hedged mostly under “zero cost collar”, this exposure would be a source of downside risk to its earnings, particularly in the case of a reversal of the oil price trend against expectations. Meanwhile, baht depreciation against the USD would also lead to larger tax expenses for the company following higher deferred tax liability. Financials 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 6.03 3.03 1.25 5.6% 21.7% 13.8%
2013 224,973 56,186 14.08 ‐17.6% 6.00 96.86 2013 7.32 2.92 1.06 5.8% 15.8% 14.2%
2014 247,817 21,490 5.19 ‐63.1% 4.50 104.19 2014 19.85 2.44 0.99 4.4% 5.4% 2.4%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 6
2015E 193,009 19,771 4.98 ‐4.0% 2.28 106.89 2015E 20.68 3.61 0.96 2.2% 4.7% 11.0%
2016E 205,310 30,929 7.79 56.4% 2.96 111.72 2016E 13.22 3.25 0.92 2.9% 7.1% 8.3%
Figure 1: PTTEP’s 2Q15E earnings preview Profit and Loss Year‐end 31 Dec
Revenue Gross profit EBITDA Interest expense Other income Income tax Forex gain (loss) Extraordinary Items Gn (Ls) from affiliates 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 (%)
2Q14
1Q15
2Q15E
% YoY
64,255 35,374 45,740 (1,894) 2,213 (7,581) (523) 260 36 18,187 18,600 4.57 55.05 71.18 28.30 2.76 13.56 0.32 108.33 17.98
48,005 18,342 35,382 (2,240) 628 (583) (887) ‐ 86 8,616 9,503 2.16 38.21 73.70 17.95 1.96 5.18 0.33 103.27 8.37
47,544 15,963 32,028 (2,267) (1,113) (3,653) (665) ‐ 70 110 2,439 0.03 33.57 67.36 0.23 1.90 3.41 0.28 101.80 0.11
(26.0) (54.9) (30.0) 19.7 nm (51.8) 27.2 (100.0 92.7 (99.4) (86.9) (99.4)
% QoQ (1.0) (13.0) (9.5) 1.2 nm 526.9 (25.0) nm (18.1) (98.7) (74.3) (98.7)
1H15E
% YoY
2015E
95,550 34,305 67,409 (4,507) (485) (4,236) (1,552) ‐ 156 8,726 11,942 2.19 35.90 70.55 9.13 1.90 4.29 0.28 101.80 4.32
(22.6) (49.9) (22.7) 20.5 nm (77.4) 126.3 (100.0 239.6 (71.5) (61.7) (71.6)
193,009 65,377 126,303 (7,153) 3,500 (8,935) (401) (825) 150 19,771 20,997 4.98 33.87 65.44 10.24 1.29 4.67 0.43 106.89 4.72
% YoY (22.1) (48.1) (26.5) (15.2) (20.3) (74.9) nm (97.5) 33.5 (8.0) (57.4) (4.0)
YTD (% 15E) 49.5 52.5 53.4 63.0 (13.9) 47.4 386.7 ‐ 103.7 44.1 56.9 43.9
Source: KT ZMICO Research
Figure 2: PTTEP’s quarterly operational data A) PTTEP’s quarterly petroleum sales volume
Source: Company, KT ZMICO Research
B) PTTEP’s quarterly ASP and gross profit margin
Source: Company, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 6
Figure 3: 2015‐16E earnings revision
Petroleum sales volume (boe/d) Dubai (US$/bbl) Average selling price (US$/boe)
New 2015E 332,001 60 47.1
Sales (Btmn) EBITDA (Btmn) Core profit (Btmn) Net profit (Btmn) EPS (Bt) 2015E DCF‐based TP (Bt)
193,009 126,303 20,997 19,771 4.98 116
2016E 342,141 65 48.7 205,310 137,083 30,929 30,929 7.79
Old 2015E 332,001 60 50.8 208,463 136,559 28,176 30,688 7.73 122
2016E 342,141 65 51.6 218,019 145,663 36,936 36,936 9.3
% chg from old 2015E 2016E 0.0 0.0 0.0 0.0 ‐7.2 ‐5.6 ‐7.4 ‐7.5 ‐25.5 ‐35.6 ‐35.6 ‐4.6
‐5.8 ‐5.9 ‐16.3 ‐16.3 ‐16.3
Source: KT ZMICO Research
Figure 4: PTTEP’s PBV band and its correlation to oil prices A) PTTEP’s PBV band
Source: Bloomberg, KT ZMICO Research
B) PTTEP share price in correlation to the crude oil price
Source: Bloomberg, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 6
Figure 5: PTTEP’s valuation comparison with regional peers
A) PTTEP’s 2015E PBV and ROE comparison with regional peers
B) PTTEP’s 2015E PBV/ROE comparison with regional peers
Source: Bloomberg, KT ZMICO Research
Figure 6: PTTEP’s valuation comparison with regional peers NAME PETROCHINA CO LTD‐H SINOPEC SHANGHAI PETROCHEM‐H CHINA CITIC RESOURCES HOLDINGS LTD CNOOC LTD HONG KONG BHARAT PETROLEUM CORP LTD HINDUSTAN PETROLEUM CORP INDIAN OIL CORP LTD OIL & NATURAL GAS CORP LTD RELIANCE INDUSTRIES LTD INDIA HANWHA CHEMICAL CORP LG CHEM LTD SK INNOVATION CO LTD LOTTE CHEMICAL CORP S. KOREA FORMOSA PLASTICS CORP NAN YA PLASTICS CORP FAR EASTERN NEW CENTURY CORP TAIWAN PTT PCL PTT EXPLOR & PROD PUBLIC CO THAILAND AVERAGE
Mkt Cap (US$Mn) 428,343 10,861 1,390 55,511 10,423 4,386 16,398 40,759 50,674 2,493 13,788 8,785 7,599 14,342 17,332 5,397 28,571 12,030
PER (x) 15E 16E 19.2 12.3 11.4 10.6 15.3 11.5
PBV (x) 15E 16E 1.2 1.2 1.5 1.4 1.3 1.3
EV/EBITDA (x) 15E 16E 9.7 8.2 13.3 12.9 11.5 10.6
n.a. 14.3 14.3
10.5 8.6 9.6
1.0 1.1 1.0
0.9 1.0 1.0
9.2 4.0 6.6
5.2 3.2 4.2
13.0 12.6 11.1 9.7 12.3 11.7
12.2 11.0 10.1 8.4 10.2 10.4
2.6 1.8 1.3 1.3 1.3 1.7
2.2 1.6 1.2 1.2 1.2 1.5
7.8 8.1 7.3 4.8 9.8 7.5
7.2 7.3 6.5 4.3 7.9 6.7
23.4 12.6 8.3 10.9 13.8
13.5 10.7 8.3 10.3 10.7
0.6 1.3 0.6 1.2 0.9
0.6 1.2 0.6 1.1 0.9
11.2 5.6 7.3 6.0 7.5
9.9 5.1 7.1 5.9 7.0
18.0 16.4 16.8 17.0
16.1 15.4 16.2 15.9
1.5 1.6 0.7 1.3
1.5 1.5 0.6 1.2
23.0 14.4 11.7 16.4
22.0 14.0 11.2 15.8
9.8 20.7 15.2 14.6
8.8 13.2 11.0 11.5
1.3 1.0 1.1 1.2
1.1 0.9 1.0 1.1
4.7 3.6 4.2 9.0
3.9 3.3 3.6 7.9
YLD (%) 15E 16E 1.9 2.7 1.8 1.9 1.9 2.3 ‐ ‐ 2.2 3.2 2.2 3.2 2.3 2.4 2.9 3.1 2.5 2.9 3.6 3.9 1.1 1.2 2.5 2.7 1.0 1.2 1.8 1.8 2.4 2.6 0.5 0.5 1.4 1.5 3.4 3.7 3.8 4.0 4.2 4.6 3.8 4.1 3.6 4.0 2.2 2.9 2.9 3.4 2.4 2.9
Source: Bloomberg, KT ZMICO Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 6
ROE (%) 15E 16E 5.0 7.0 11.0 10.6 8.0 8.8 (0.2) 7.0 3.4
9.1 10.3 9.7
20.7 13.8 12.4 14.0 11.1 14.4
19.3 14.3 12.3 14.8 12.1 14.6
2.8 10.3 7.8 11.4 8.1
4.6 11.1 7.3 10.8 8.5
8.7 9.5 5.6 7.9
9.1 9.7 3.3 7.4
13.5 4.7 9.1 8.5
13.6 7.1 10.4 9.9
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
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
2015E 193,009 (127,632) 65,377 (31,942) 126,303 92,868 33,435 (7,153) 3,500 29,782 (8,935) (401) (825) 150 19,771 4.98 4.98 20,997 5.29 2.28
2016E 205,310 (125,608) 79,702 (33,965) 137,083 91,346 45,736 (5,266) 3,500 43,970 (13,191) 0 0 150 30,929 7.79 7.79 30,929 7.79 2.96
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
2014 129,562 26,316 13,060 378,612 220,057 767,607 24,696 114,695 353,988 3,970 413,620 767,607
2015E 136,034 21,152 15,735 423,141 216,546 812,608 85,672 97,075 388,273 3,970 424,336 812,608
2016E 142,836 22,500 15,486 430,190 213,856 824,868 82,698 97,075 381,356 3,970 443,512 824,868
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)
2014 21,490 (4,809) 83,215 (1,678) 98,218 (46,849)
2015E 19,771 401 92,868 (7,511) 105,529 (137,397)
2016E 30,929 0 91,346 (4,871) 117,405 (98,396)
(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)
(46,849) 7,383 26,339 (18,633) (14,243) 845 52,215 51,370 12.94
(137,397) 43,356 150 (9,055) 3,889 38,340 6,472 ‐31,868 ‐8.03
(98,396) (2,975) 150 (11,753) 2,371 (12,207) 6,802 19,009 4.79
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 10.2 8.4 (63.1) 50.8 69.3 35.8 8.7 19.9 42.0
2015E (22.1) (26.5) (4.0) 33.9 65.4 17.3 10.2 10.9 30.0
2016E 6.4 8.5 56.4 38.8 66.8 22.3 15.1 15.1 30.0
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 5 of 6
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
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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
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.
