The share price of PTT Exploration and Production Public Company Limited (PTTEP) rose ฿3.00/share or 2.59% to ฿119.00/share at the closing morning session on April 29, with a trading value of 1,635 million baht.
PTTEP share has been rising for 4 consecutive days from ฿113.00/share on April 23, which is expected to have positive sentiment from strong earnings in 1Q and WTI crude for June last night (April 28) was at US$63.86 a barrel, up 92 cents, or 1.5%, reaching a new high in a month.
Krungsri Securities (KSS) maintained a “BUY” recommendation on PTTEP with a target price of ฿160.00/share, expecting earnings momentum to gain pace in 2Q onward. The target price is pegged to 15.0x FY21F PE,or 20% premium to average PE multiple in FY18-19, when Dubai crude oil prices were at US$69.4 and US$63.5 respectively, close to KSS US$68/bbl assumption. KSS also assigned a 20% premium on PE multiple to reflect volume growth of 12%/22% in FY21/22F.
For 2021F outlook, PTTEP guided higher sales volume at 416k boed for 2Q driven by full-quarter contribution from Oman and production ramp-up at Sabah H in Malaysia. They also guided avg gas prices at US$5.8/mmbtu for 2Q and US$5.6 for 2021, based on Dubai oil price assumption at US$55/bbl. Softening gas prices this year are reflected from lower gas prices in Oman and Malaysia.
KGI Securities (KGI) stated that PTTEP’s 1Q21 earnings report of 11.5 billion baht (+34% YoY, +357% QoQ) has beaten the Bloomberg consensus by 119% and its forecast by 113% mainly thanks to extra gain of US$350mn from a bargain purchase of the Oman Block 61 project. However, the company also booked extra expense of US$145 million baht from partial write-off of the exploration project in Brazil for the quarter. Excluding both extra items, operating earnings were in line with KGI forecast.
KGI maintained a rating of Outperform on the counter with an unchanged 2022 target price of ฿145.00/share, based on DCF methodology with WACC of 9.3% and terminal growth of 1.0%. Meanwhile, revising up the earnings forecast for 2021 by 16% to 45.6 billion baht as KGI added the two extra items in 1Q21 into its model.