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Regional Oil & Gas Summary - 15 May 2014

Core Content

The document provides an overview of the regional oil and gas market as of 14 May 2014, highlighting price movements, news headlines, and analyst reports. It includes data on major oil and gas prices, company performance, and valuation metrics.

Major Oil & Gas Prices and Indexes (Closing as of 14 May 2014)

Key News Headlines

• CNPC: China could become a net refined product exporter to Middle East

  • China's annual refined product consumption is projected to increase from 286m tonnes in 2013 to 360m/440m tonnes in 2020/2030.
  • Refining capacity is expected to exceed demand by 10m-50m tonnes per year.

• Shengli crude refining margins remain stable

  • Independent refiners in Shandong using Shengli crude saw flat refining margins at USD4/bbl, down from USD5/bbl a week prior.

• Fuel oil import volume is expected to grow 21.8% MoM in May for South China

  • The import volume is projected to reach 274k tonnes, a 45.7% YoY increase.

• Gazprom says it wants to sell gas to China, not partner with Chinese companies

  • Gazprom plans to export 38bcm of gas to China by end-2018, according to Deputy CEO Vitaly Markelov.

• Formosa Plastics shuts Vietnam plant amid anti-China protests

  • The Vietnam plant was shut down due to anti-China demonstrations.

• Petronas 1Q14 profits down 8%

  • Petronas reported profits of MYR16.2b, down from MYR17.6b a year ago.
  • The company is in talks with potential buyers for its Canadian LNG project.

• Kogas 1Q14 LNG imports at 12.61m tonnes

  • South Korea's Kogas imported 12.61m tonnes of LNG, up 0.5% YoY.

• Taiwan's FPCC offers to buy LPG

  • Formosa Petrochemical Corp (FPCC) offered to buy up to 44k tonnes of LPG for 2H June delivery.

Latest Reports

• Mermaid Maritime - Weaker subsea a huge drag

  • 2QFY9/14 PATMI dropped 60.7% QoQ to USD5.2m, below expectations.
  • Management expects to catch up in 2H9/14.
  • Target Price: SGD0.59, based on 14x FY9/14E P/E.

• MY Oil & Gas - Key takeaways from Conference

  • The O&G market is expected to remain robust over the next 3 years.
  • Companies with strong financials will benefit, but many may fail due to Shariah compliance.
  • Sector is Overweight.

• MISC Bhd - Petroleum ops fuelled 1Q14

  • 1Q14 results were in line with expectations.
  • Expect QoQ weakness in 2Q14 due to softening petroleum operations.
  • Target Price: MYR7.20.

• Perisai Petroleum - Secures first JU contract

  • The JU rig Pacific 101 will be chartered to PCSB for 3 years.
  • Expected to contribute MYR42m-44m net profit annually.
  • Target Price: MYR1.76, based on 14x FY15 PER.

Analyst Contacts

• Howard Wong - HK/CHINA

  • (852) 22680648
  • howardwong@kimeng.com.hk

• Jigar Shah - INDIA

  • (91) 2266232601
  • jigar@maybank-ke.co.in

• Pandu Anugrah - INDONESIA

  • (62) 21 2557 1137
  • pandu.anugrah@maybank-ke.co.id

• Liaw Thong Jung - MALAYSIA

  • (603) 22978688
  • tjiaw@maybank-ib.com

• Laura Dy-Liacco - PHILIPPINES

  • (63) 28498840
  • laura_dyliacco@maybank-atrke.com

• Yeah Chee Keong - SINGAPORE

  • (65) 6432 1460
  • yeakcheekeong@maybank-ke.com.sg

• Sutthichai Kumworachai - THAILAND

  • (66) 2658 6300 x 1400
  • sutthichai.k@maybank-ke.co.th

• Bianca Solema - PHILIPPINES

  • (63) 28498835
  • bianca_solema@maybank-atrke.com

• Le Nguyen Nhat Chuyen - VIETNAM

  • (84) 844555888×8082
  • chuyen.le@maybank-kimeng.com.vn

• Truong Quang Binh - VIETNAM

  • (84) 4 44 555 888 × 8087
  • binh.truong@maybank-kimeng.com.vn

Valuation Comparison

Asia Oil & Gas Average

• P/E (X): 12.3 (2013), 11.2 (2014E)
• EV/EBITDA (X): 7.4 (2013), 6.3 (2014E)
• RoE (%): 13.2 (2013), 11.7 (2014E)
• P/B (X): 1.6 (2013), 4.6 (2014E)
• Yield (%): 3.8 (2013), 3.5 (2014E)

Asian Oil Service Average

• P/E (X): 14.3 (2013), 11.2 (2014E)
• EV/EBITDA (X): 5.9 (2013), 4.9 (2014E)
• RoE (%): 14.0 (2013), 11.7 (2014E)
• P/B (X): 1.6 (2013), 4.6 (2014E)
• Yield (%): 3.8 (2013), 3.5 (2014E)

Key Companies

• PetroChina - H (857 HK): P/E (10.3, 10.2), EV/EBITDA (6.1, 5.3), RoE (11.8, 11.8), P/B (1.2, 1.2)
• Sinopec - H (386 HK): P/E (9.9, 9.1), EV/EBITDA (5.4, 4.8), RoE (12.2, 12.2), P/B (1.1, 1.1)
• CNOOC LTD (883 HK): P/E (8.4, 8.4), EV/EBITDA (3.8, 3.7), RoE (17.3, 17.3), P/B (1.4, 1.4)
• ONGC (ONGC IN): P/E (13.0, 11.9), EV/EBITDA (7.1, 5.4), RoE (16.8, 16.8), P/B (2.1, 2.1)
• Reliance Industries (RIL IN): P/E (14.8, 12.7), EV/EBITDA (12.0, 9.6), RoE (11.9, 11.9), P/B (1.7, 1.7)
• Cairn India (CAIR IN): P/E (5.4, 4.7), EV/EBITDA (3.6, 3.0), RoE (25.1, 25.1), P/B (1.4, 1.4)
• BPCL (BPCL IN): P/E (19.9, 17.2), EV/EBITDA (8.0, 9.2), RoE (11.5, 11.5), P/B (2.2, 2.2)
• HPLC (HPLC IN): P/E (25.4, 13.9), EV/EBITDA (13.2, 11.0), RoE (3.7, 3.7), P/B (0.9, 0.9)
• Petronas Gas (PTG MK): P/E (22.5, 28.1), EV/EBITDA (17.5, 15.2), RoE (21.4, 21.4), P/B (4.5, 4.5)
• PTT Global Chemical PCL (PTTGC TB): P/E (9.3, 8.3), EV/EBITDA (7.1, 7.3), RoE (14.4, 14.4), P/B (1.3, 1.3)
• PTT PCL (PTT TB): P/E (9.2, 7.3), EV/EBITDA (5.7, 5.5), RoE (14.7, 14.7), P/B (1.3, 1.3)
• Thai Oil PCL (TOP TB): P/E (10.0, 8.9), EV/EBITDA (6.6, 7.0), RoE (11.7, 11.7), P/B (1.1, 1.1)
• PetroVietnam Gas (GAS VN): P/E (14.9, 13.6), EV/EBITDA (9.4, 8.6), RoE (40.8, 40.8), P/B (5.1, 6.3)

Summary of Key Points

• Crude oil prices (Brent and WTI) increased slightly, while gold and USD-CNY showed modest gains and declines respectively.
• China is expected to increase its refined product consumption significantly, potentially becoming a net exporter to the Middle East.
• Shengli crude refining margins remained stable, and South China's fuel oil imports are projected to grow.
• Gazprom plans to export gas to China rather than forming partnerships.
• Formosa Plastics shut down its Vietnam plant due to anti-China protests.
• Petronas reported lower profits in 1Q14, and Kogas saw a small increase in LNG imports.
• FPCC is offering to buy LPG for 2H June delivery.
• Mermaid Maritime experienced a significant drop in profits, but management is optimistic about recovery.
• MISC Bhd and Perisai Petroleum received BUY ratings with target prices.
• Valuation metrics for Asian oil and gas companies show a mix of P/E, EV/EBITDA, RoE, and P/B ratios, indicating varied market sentiments and investment outlooks.

Conclusion

The regional oil and gas market as of 14 May 2014 shows mixed performance with slight gains in crude oil and gold, while some companies faced challenges such as reduced profits and operational disruptions. The outlook for the sector is generally positive, with expectations of continued growth and opportunities across the value chain. Analysts have provided valuations and ratings, highlighting both investment potential and risks, especially in the context of geopolitical tensions and market dynamics.