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Regional Oil & Gas Summary

Core Content

This document provides an overview of the oil and gas market conditions and analyst ratings for key companies in the Asia-Pacific region as of 1 September 2015. It includes information on global oil prices, regional market trends, and specific company performance and outlooks.

Key Market Movements

• Brent Crude Oil fell by 8.5% to USD49.56/b, with a 1-day change of -4.59 USD/b.
• WTI Crude Oil dropped by 7.7% to USD45.41/b, with a 1-day change of -3.79 USD/b.
• Dubai Fateh Spot increased by 6.2% to USD51.20/b, with a 1-day change of +2.98 USD/b.
• China Daqing Spot rose by 20.2% to USD47.03/b, with a 1-day change of +7.91 USD/b.
• NYMEX Henry Hub increased slightly by 0.5% to USD2.70/MMBtu, with a 1-day change of +0.01 USD/MMBtu.
• LNG Northeast Asia CFR increased by 20.2% to USD7.67/MMBtu, with a 1-day change of +0.00 USD/MMBtu.
• Singapore 92 RON Spot decreased by 6.3% to USD58.48/b, with a 1-day change of -3.95 USD/b.
• Gasoil 500 ppm SG Spot rose by 7.7% to USD66.34/b, with a 1-day change of +4.72 USD/b.
• 3.5% 180cst Fuel SG Spot increased by 0.0% to USD240.37/mt, with a 1-day change of +0.00 USD/mt.
• Gold increased by 0.5% to USD1,140.27/Oz, with a 1-day change of +5.34 USD/Oz.
• USD-CNY decreased by 0.2% to 6.36, with a 1-day change of -0.01.
• DJI dropped by 2.8% to 16,058.35, with a 1-day change of -469.68.
• S&P 500 fell by 3.0% to 1,913.85, with a 1-day change of -58.33.

News Highlights

1. China cuts retail fuel prices:

   • China reduced gasoline and diesel prices by 0.09 yuan per liter and 0.1 yuan per liter, respectively.
   • This is the sixth cut since June and the ninth of the year.
   • The move reflects the continuing decline in global crude prices.

2. Oil slumps on China data:

   • Oil prices fell sharply after China's PMI dropped to 49.7, the lowest in three years.
   • This reinforced concerns about the second-largest economy, leading to a retreat in oil prices.

3. EIA: US petrol prices 'unchanged' with oil exports:

   • The EIA study suggested that lifting the 40-year ban on crude oil exports would not raise petrol prices and might even lower them in some cases.
   • This supports the arguments of industry advocates regarding price relief for American consumers.

4. Russia says oil output could decline if prices stay low:

   • Russia may see a decline in oil production if prices remain low, but it will not deliberately cut production to support prices.
   • Russia is open to discussing price stabilisation measures with OPEC and other producers.

5. Oil bear bets on return to $25 a barrel:

   • A major bear in the oil market, Pierre Andurand, believes prices will drop below $30/b.
   • He argues that the recent rally was overreacted to slowing US production and OPEC comments.

6. Indonesia's Sep gasoline imports to rise:

   • Pertamina is expected to import 10.44 million barrels of gasoline in September.
   • The increase is likely due to the Eid al-Adha holiday on September 24, which typically boosts demand.

Analyst Reports

China

• PetroChina (H): SELL

  • 1H15 net profit: CNY25.4b, down 63% YoY.
  • Only 50% of full-year forecast.
  • Expect drastic earnings cuts for 2H15 and 2016 due to lower oil prices.
  • Estimates and rating are under review.

• China Petroleum & Chemical Corp: HOLD

  • 1H15 net profit: CNY25.4b, down 22% YoY.
  • 68% of FY15 consensus forecast.
  • Expect drastic earnings cuts for 2H15 and 2016 due to lower oil prices.
  • Estimates and rating are under review.

• CNOOC LTD: BUY

  • 1H15 profit: CNY14.7b, 57% of FY15 consensus forecast.
  • Strong volume growth and cost control.
  • Expect drastic earnings cuts for 2H15 and 2016 due to lower oil prices.
  • Estimates and rating are under review.

Malaysia

• UMW Oil & Gas: SELL

  • Tougher times ahead due to low utilization and DCRs.
  • Earnings cut by 39% - 142% to reflect lower DCRs and utilization rates.
  • Target price lowered to MYR0.80 (-57%).

• Gas Malaysia: BUY

  • Price: MYR2.07, target price: MYR2.65.
  • Market cap: MYR0.6b, 90D turnover: MYR0.2b.
  • 2015E PER: 21.5x, 2016E PER: 21.5x.
  • 2015E EV/EBITDA: 11.9x, 2016E EV/EBITDA: 11.6x.

• Petronas Gas: HOLD

  • Price: MYR21.40, target price: MYR24.00.
  • Market cap: MYR12.2b, 90D turnover: MYR6.2b.
  • 2015E PER: 23.4x, 2016E PER: 23.2x.
  • 2015E EV/EBITDA: 14.0x, 2016E EV/EBITDA: 13.7x.

Philippines

• Petron Corp: BUY

  • Price: PHP7.71, target price: PHP11.25.
  • Market cap: PHP1.5b, 90D turnover: PHP0.6b.
  • 2015E PER: 16.7x, 2016E PER: 9.8x.
  • 2015E EV/EBITDA: 8.9x, 2016E EV/EBITDA: 7.1x.

• Phoenix Petro: BUY

  • Price: PHP3.35, target price: PHP4.75.
  • Market cap: PHP0.1b, 90D turnover: PHP0.1b.
  • 2015E PER: 5.7x, 2016E PER: 5.0x.
  • 2015E EV/EBITDA: 7.6x, 2016E EV/EBITDA: 6.9x.

India

• ONGC: NR

  • Price: INR234.1, target price: NR.
  • Market cap: INR30.1b, 90D turnover: INR17.8b.
  • 2015E PER: 8.4x, 2016E PER: 7.9x.
  • 2015E EV/EBITDA: 4.4x, 2016E EV/EBITDA: 4.1x.

• Reliance Industries: NR

  • Price: INR839.9, target price: NR.
  • Market cap: INR40.9b, 90D turnover: INR61.1b.
  • 2015E PER: 11.3x, 2016E PER: 10.5x.
  • 2015E EV/EBITDA: 9.9x, 2016E EV/EBITDA: 8.7x.

• Cairn India: HOLD

  • Price: INR145.6, target price: INR198.00.
  • Market cap: INR4.1b, 90D turnover: INR7.6b.
  • 2015E PER: 4.0x, 2016E PER: 6.8x.
  • 2015E EV/EBITDA: 1.2x, 2016E EV/EBITDA: 1.9x.

• BPCL: NR

  • Price: INR863.4, target price: NR.
  • Market cap: INR9.4b, 90D turnover: INR24.8b.
  • 2015E PER: 19.9x, 2016E PER: 11.0x.
  • 2015E EV/EBITDA: 10.6x, 2016E EV/EBITDA: 7.3x.

• HPCL: NR

  • Price: INR814.9, target price: NR.
  • Market cap: INR4.2b, 90D turnover: INR24.6b.
  • 2015E PER: 20.9x, 2016E PER: 9.5x.
  • 2015E EV/EBITDA: 10.2x, 2016E EV/EBITDA: 7.4x.

Japan

• INTEX: NR

  • Price: JPY1,190, target price: NR.
  • Market cap: JPY14.5b, 90D turnover: JPY59.5b.
  • 2015E PER: 20.0x, 2016E PER: 24.8x.
  • 2015E EV/EBITDA: 3.1x, 2016E EV/EBITDA: 3.7x.

• JAPEX: NR

  • Price: JPY3,470, target price: NR.
  • Market cap: JPY1.7b, 90D turnover: JPY9.2b.
  • 2015E PER: 5.7x, 2016E PER: N/A.
  • 2015E EV/EBITDA: 4.4x, 2016E EV/EBITDA: 4.1x.

• JX Holding: NR

  • Price: JPY456, target price: NR.
  • Market cap: JPY9.5b, 90D turnover: JPY51.4b.
  • 2015E PER: N/A, 2016E PER: 8.4x.
  • 2015E EV/EBITDA: -252.9x, 2016E EV/EBITDA: -15.1x.

• Showa Shell: NR

  • Price: JPY1,006, target price: NR.
  • Market cap: JPY3.2b, 90D turnover: JPY17.7b.
  • 2015E PER: 16.4x, 2016E PER: 11.6x.
  • 2015E EV/EBITDA: 7.7x, 2016E EV/EBITDA: 6.6x.

• TonenGeneral: NR

  • Price: JPY1,185, target price: NR.
  • Market cap: JPY5.6b, 90D turnover: JPY19.1b.
  • 2015E PER: 19.5x, 2016E PER: 12.5x.
  • 2015E EV/EBITDA: 11.8x, 2016E EV/EBITDA: 10.6x.

• Idemitsu: NR

  • Price: JPY2,003, target price: NR.
  • Market cap: JPY2.7b, 90D turnover: JPY14.6b.
  • 2015E PER: N/A, 2016E PER: 7.5x.
  • 2015E EV/EBITDA: -33.0x, 2016E EV/EBITDA: -15.9x.

• Cosmo: NR

  • Price: JPY183, target price: NR.
  • Market cap: JPY1.3b, 90D turnover: JPY6.4b.
  • 2015E PER: N/A, 2016E PER: 6.7x.
  • 2015E EV/EBITDA: -181.1x, 2016E EV/EBITDA: -36.6x.

South Korea

• S-Oil: NR

  • Price: KRW60,700, target price: NR.
  • Market cap: KRW5.8b, 90D turnover: KRW22.5b.
  • 2015E PER: 7.6x, 2016E PER: 8.4x.
  • 2015E EV/EBITDA: -33.0x, 2016E EV/EBITDA: -15.9x.

• SK Innovation: NR

  • Price: KRW99,700, target price: NR.
  • Market cap: KRW7.8b, 90D turnover: KRW42.6b.
  • 2015E PER: 6.9x, 2016E PER: 7.7x.
  • 2015E EV/EBITDA: -33.0x, 2016E EV/EBITDA: -15.9x.

• GS Holdings: NR

  • Price: KRW46,000, target price: NR.
  • Market cap: KRW3.6b, 90D turnover: KRW11.1b.
  • 2015E PER: 8.0x, 2016E PER: 8.0x.
  • 2015E EV/EBITDA: -33.0x, 2016E EV/EBITDA: -15.9x.

Taiwan

• Formosa Petrochemical: NR
  • Price: TWD72.50, target price: NR.
  • Market cap: TWD21.3b, 90D turnover: TWD8.1b.
  • 2015E PER: 19.2x, 2016E PER: 19.5x.
  • 2015E EV/EBITDA: -181.1x, 2016E EV/EBITDA: -36.6x.

Thailand

• PTT Global Chemical PCL: BUY

  • Price: THB56.0, target price: THB87.00.
  • Market cap: THB7.1b, 90D turnover: THB25.7b.
  • 2015E PER: 9.1x, 2016E PER: 8.0x.
  • 2015E EV/EBITDA: 6.1x, 2016E EV/EBITDA: 5.6x.

• PTT PCL: BUY

  • Price: THB264.0, target price: THB395.00.
  • Market cap: THB21.1b, 90D turnover: THB61.2b.
  • 2015E PER: 8.8x, 2016E PER: 7.9x.
  • 2015E EV/EBITDA: 12.1x, 2016E EV/EBITDA: 12.2x.

• Thai Oil PCL: SELL

  • Price: THB49.3, target price: THB65.00.
  • Market cap: THB2.8b, 90D turnover: THB8.5b.
  • 2015E PER: 8.2x, 2016E PER: 8.8x.
  • 2015E EV/EBITDA: 5.9x, 2016E EV/EBITDA: 6.0x.

Vietnam

• PetroVietnam Gas: BUY
  • Price: VND47,600, target price: VND92,000.
  • Market cap: VND4.0b, 90D turnover: VND1.1b.
  • 2015E PER: 10.4x, 2016E PER: 11.1x.
  • 2015E EV/EBITDA: 5.0x, 2016E EV/EBITDA: 4.9x.

Summary of Ratings and Projections