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Regional Oil & Gas Summary - 19 May 2014

Core Content Overview

This summary provides an overview of oil and gas market trends and key company reports as of 19 May 2014, focusing on price movements, company performance, and analyst ratings.

Major Price Movements

• Brent Crude Oil: Up by 0.7% to $109.81.
• WTI Crude Oil: Up by 0.5% to $102.02.
• Henry Hub: Down by 1.3% to $4.41/MMBtu.
• LNG Northeast Asia CFR (Platts JKM): Trading at $13.625/MMBtu for July, indicating weak demand and ample supply.
• Asia naphtha prices: Declined due to increased LPG blending, with 1H July Japan CFR prices at $946.50-948.50/tonne.

News Highlights

China

• Refinery throughput: Expected to fall 0.7% MoM in May, with Sinopec and PetroChina seeing a 2.3% decline.
• Wholesalers' inventory: Gasoline inventory dropped by 2.35%, while gasoil inventory increased slightly by 0.66%.
• Refined product demand: Expected to improve in 2H14 due to the maiden contribution from the JU rig, Pacific 101.

Japan

• Naphtha imports: Fell 19% YoY in April to 987,344 tonnes.

Russia

• Gazprom Neft: 1Q14 profits dropped 4.4% due to forex losses, despite higher production. Adjusted EBITDA increased 9.6% compared to 1Q13.

Saudi Arabia

• LPG loading plans: No change in volume, but some cargo schedules may be delayed.

Brazil

• Petrobras: Set a record pre-salt production of 470kbpd, up 30% from February 2013.

India

• Cairn India: Expected to outperform with a buy rating and a target price of MYR443.

Company Reports

Dialog Group

• Earnings shortfall: 9MFY14 net profit of MYR164m was 67% / 68% of full-year forecasts.
• Earnings forecast: Lowered by 8% / 4% / 4% for FY14, FY15, and FY16 respectively.
• Target Price: MYR3.90, with re-rating potential.

Perisai Petroleum

• Losses expected: 1Q14 net loss of MYR3m was within estimates but below consensus.
• Target Price: MYR1.76, based on 14x FY15 PER.

SapuraKencana Petroleum

• Contracts galore: Secured 5 contracts worth USD312m.
• Target Price: MYR5.30, with improving contracts momentum.

Petron Corp

• Earnings: 1Q14 net income of PHP2.23b accounted for 29% of full-year 2014 forecast.
• Target Price: PHP15.90, pending detailed financials.
• RMP-2: 98% complete, on track for operations in 4Q14.

Mermaid Maritime

• PATMI: 2QFY9/14 PATMI dropped 60.7% QoQ to USD5.2m.
• Target Price: SGD0.59, based on 14x FY9/14E P/E.

MY Oil & Gas

• Market outlook: Expected to remain robust over the next 3 years.
• Sector rating: Overweight, with companies having sound financials likely to benefit, but Shariah compliance could be a challenge.

MISC Bhd

• Results: In line with expectations, with petroleum ops as the key positive.
• Target Price: MYR7.20, with expectation of QoQ weakness in 2Q14.

Nam Cheong Ltd

• PATMI: MYR71.1m (+98.7 YoY, +0.9% QoQ), driven by higher vessel deliveries.
• Target Price: SGD0.41, based on 9x FY14E P/E.

Valuation Comparison (Asia)

Analyst Contact Details

• 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
• Bianca Solema (PHILIPPINES): (63) 28498835, bianca_solema@maybank-atrke.com
• Laura Dy-Liacco (PHILIPPINES): (63) 28498840, laura_dyliacco@maybank-atrke.com
• Yeast Chee Keong (SINGAPORE): (65) 6432 1460, yeakcheeong@maybank-ke.com.sg
• Sutthichai Kumworachai (THAILAND): (66) 2658 6300 x 1400, sutthichai.k@maybank-ke.co.th
• 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

Notes

• All forward-looking estimates and multiples for companies not under MayBank Kim Eng's coverage are from Bloomberg consensus.
• Average multiples and yields are weighted by market capitalization.
• NR = Not Rated, UR = Under Review.