20170111-Maybank_KERPL-Regional_Oil_amp_Gas_Grease_Spot_11页_394kb

Regional Oil & Gas Summary

Core Content

The document provides an overview of the regional oil and gas market trends and investment outlook as of January 10, 2017. It includes price movements, market analysis, and analyst ratings for various companies across Asia, including China, India, Malaysia, Philippines, Thailand, and Vietnam, as well as global oil majors.

Major Price Movements

• Brent Crude Oil: Declined by 2.4% to USD53.64/bbl
• WTI Crude Oil: Declined by 2.2% to USD50.82/bbl
• Dubai Fateh Spot: Down 1.9% to USD52.91/barrel
• China Daqing Spot: Down 1.9% to USD52.11/barrel
• NYMEX Henry Hub: Up 5.6% to USD3.28/MMBtu
• LNG Northeast Asia CFR: Up 2.8% to USD8.75/MMBtu
• Singapore 92 RON Spot: Down 2.8% to USD63.76/barrel
• Gasoil 500 ppm SG Spot: Down 1.5% to USD64.72/gallon
• 3.5% 180cst Fuel SG Spot: Down 1.9% to USD320.61/mt
• Gold: Up 0.6% to USD1,187.88/Oz
• USD-CNY: Down 0.2% to 6.92
• DJI: Down 0.2% to 19,855.53
• S&P 500: No change at 2,268.90

Key News Headlines

1. Iraq Confirms Oil-Output Cut Even as Scheduled Exports Rise

   • Iraq reduced oil production by 160,000 barrels per day.
   • Expected to export 3.64 million barrels per day in February, up from 3.51 million barrels per day in December.
   • Analysts suggest that the production cut should be visible in lower exports due to limited storage capacity.

2. EIA: US Crude Output Seen Rising Through 2018

   • US crude oil production is expected to increase by 300,000 bpd in 2018 over 2017 levels.
   • Projected to reach 9.3 million bpd in 2018 from 9 million bpd in 2017.
   • The increase is attributed to federal offshore production and tight oil production.

3. US Oil and Gas Industry Spending Set to Surge

   • US oil and gas spending is expected to rise 27% in 2017.
   • US shale producers are likely to recover quickly due to their responsiveness to price changes.

4. Outlook 2017: China LPG Demand to Continue Rising, But at a Slower Rate

   • China's LPG demand is forecasted to grow by 10% in 2017, compared to 24% in 2016.
   • Net imports are expected to rise by 3 million mt to 18 million mt in 2017.

Our Latest Reports

1. China Oil & Gas - 7th Inning Stretch: Downgrade to Neutral

   • China oil market recovery is becoming a consensus view.
   • Oil sector valuations are no longer distressed.
   • Recommendation: Maintain benchmark weightings in upstream and increase exposure to oil services.
   • Top picks: SapuraKencana Petroleum (SAKP MK, BUY) and Yinson Holdings (YNS MK, BUY).

2. UMW Oil & Gas - Bags Charter for Naga 7 | BUY

   • UMWOG secured a 18-month charter for Naga 7 with Petronas Carigali S/B.
   • This is the company's first rig contract in 2017.
   • This development improves earnings forecasts.
   • UMWOG is seen as a proxy for oil price and upstream capex growth.

3. Indorama Ventures - Polyester Juggernaut | BUY

   • Indorama Ventures is now the world's largest integrated PET producer.
   • The company is expected to benefit from a nascent PTA upcycle.
   • Forecasted core net profit growth of 26% CAGR for FY17/18.
   • Free cash flow may turn positive in 2017.

Analyst Contacts

• Howard Wong - HK/CHINA - (852) 22680648 - howardwong@kimeng.com.hk
• Jessie Li - HK/CHINA - (852) 22680642 - jessieli@kimeng.com.hk
• Jigar Shah - INDIA - (91) 226623 2632 - jigar@maybank-ke.co.in
• Pandu Anugrah - INDONESIA - (62) 21 2557 1137 - pandu.anugrah@maybank-ke.co.id
• Liaw Thong Jung - MALAYSIA - (603) 2297 8688 - tjiaw@maybank-ib.com
• Michael Bengson - PHILIPPINES - (63) 28498840 - micheal bengson@maybank-atrke.com
• Yeah Chee Keong - SINGAPORE - (65) 6231 5842 - yeakcheekeong@maybank-ke.com.sg
• Yupapan POLPORNPRASERT - THAILAND - (66) 2658 6300 ext 1395 - yupapan.p@maybank-ke.co.th
• Le Nguyen Nhat Chuyen - VIETNAM - (84) 844555888×8082 - chuyen.le@maybank-kimeng.com.vn
• Truong Quang Binh - VIETNAM - (84) 444555888 $\times$ 8087 - binh.truong@maybank-kimeng.com.vn

Key Companies and Ratings

Summary of Key Trends

• Oil Prices: Brent and WTI both declined, but LNG prices increased.
• China Market: LPG demand is expected to grow at a slower rate in 2017, and the oil sector is no longer seen as distressed.
• US Market: Crude output is expected to rise through 2018, with a significant increase in spending.
• Investment Outlook: Oil services and upstream sectors are recommended for increased exposure.
• Ratings: Several companies are rated BUY, including Indorama Ventures, SapuraKencana, and UMWOG.

Conclusion

The document outlines a mixed outlook for the regional oil and gas markets, with some sectors showing signs of recovery and others still under pressure. The focus is on China and Malaysia as key regions with growth potential, while India and Vietnam show more cautious ratings. Investment opportunities are highlighted in the oil services and upstream segments, with BUY ratings for selected companies.