Regional Oil & Gas Summary - 14 May 2014
Core Market Overview
On 14 May 2014, the oil and gas market experienced mixed performance with the Henry Hub price falling by 1.7%, while Brent and WTI crude oil prices rose by 0.8% and 1.1%, respectively. The report includes key news and market insights from various regions, as well as analysis on major oil and gas companies and their valuation metrics.
Key News Headlines
- China's Ethylene Self-Sufficiency: China's self-sufficiency in ethylene (C2) is expected to peak at around 50% in 2018, according to Wood Mackenzie.
- CNPC Investment in Turkmenistan: China National Petroleum Corporation (CNPC) has invested USD4 billion in Turkmenistan gas projects, aiming to increase gas purchases to 65bcm p.a.
- Tire Rubber Market: The tire rubber sector is entering its fourth year of supply glut, with analysts predicting a 12% decline in futures prices to JPY180/kg or USD1,759/tonne in 2014.
- Indonesia's Gas Utilities: Indonesia has canceled its plan to merge PGN and Pertagas, opting instead for collaboration in developing a gas distribution system.
- OMV Output Guidance: OMV has trimmed its 2014 output guidance for Libya due to instability in the region.
- BMT Maintenance Contract: UK-based BMT has secured a three-year maintenance contract with Shell in Malaysia.
- Taiwan's CPC Actions: Taiwan's CPC has called off a tender to purchase 9,000 tonnes of benzene and will shut down its No. 6 aromatics unit for 10 days in 2H May for an overhaul.
- Formosa Plastics: Formosa Plastics has stated that no leaks or environmental damage were found after an investigation into a VCM facility abnormality.
Latest Reports
MY Oil & Gas
- Key Takeaways: The O&G market is expected to remain robust over the next three years, with opportunities across the value chain.
- Sector Outlook: Companies with strong financials will benefit, but many may fall out due to Shariah compliance.
- Rating: Overweight on the sector.
MISC Bhd
- Rating: BUY
- Target Price: MYR7.20
- Performance: 1Q14 results were in line, with petroleum operations as the key positive.
- Expectation: Weakness expected in 2Q14 as petroleum operations slow down.
Perisai Petroleum
- Rating: BUY
- Target Price: MYR1.76
- Performance: Secured a three-year JU contract with PCSB, better than expected.
- Profit Estimate: Expected to contribute MYR42m-44m net profit annually based on DCR and pretax margin assumptions.
Malaysia Marine and Heavy Engineering
- Rating: BUY
- Target Price: MYR4.20
- Performance: 1Q14 net profit of MYR35m was in line with expectations but below consensus.
- Expectation: Anticipated new job flows in 2H14.
Oil & Gas Valuation Comparison
Asia Oil & Gas
| Company |
Ticker |
KE Rating |
Price (13-May) |
Target Price |
Mkt Cap (USD b) |
90D T/O (USD m) |
P/E (2013) |
P/E (2014E) |
EV/EBITDA (2013) |
EV/EBITDA (2014E) |
RoE (%) |
P/B (X) |
Yield (%) |
| PetroChina - H |
857 HK |
NR |
9.24 |
NR |
224.1 |
97.7 |
10.3 |
10.3 |
6.1 |
5.3 |
11.8 |
1.2 |
4.4 |
| Sinopec - H |
386 HK |
NR |
7.05 |
NR |
98.0 |
118.7 |
9.8 |
9.0 |
5.4 |
4.8 |
12.2 |
1.1 |
4.3 |
| CNOOC LTD |
883 HK |
NR |
13.10 |
NR |
75.5 |
102.8 |
8.2 |
8.3 |
3.8 |
3.6 |
17.3 |
1.3 |
4.3 |
India Oil & Gas
| Company |
Ticker |
KE Rating |
Price (13-May) |
Target Price |
Mkt Cap (USD b) |
90D T/O (USD m) |
P/E (2013) |
P/E (2014E) |
EV/EBITDA (2013) |
EV/EBITDA (2014E) |
RoE (%) |
P/B (X) |
Yield (%) |
| ONGC |
ONGC IN |
NR |
372.60 |
NR |
53.6 |
24.7 |
13.2 |
12.0 |
7.2 |
5.5 |
16.8 |
2.1 |
2.5 |
| Reliance Industries |
RIL IN |
NR |
1,063.40 |
NR |
57.8 |
61.0 |
15.0 |
12.9 |
12.2 |
9.7 |
11.9 |
1.7 |
0.8 |
| Cairn India |
CAIR IN |
buy |
336.35 |
443.00 |
10.8 |
14.7 |
5.3 |
4.7 |
3.5 |
3.0 |
25.1 |
1.3 |
3.4 |
| BPCL |
BPCL IN |
NR |
509.40 |
NR |
6.2 |
12.3 |
19.6 |
16.9 |
7.9 |
9.1 |
11.5 |
2.2 |
2.2 |
Japan Oil & Gas
| Company |
Ticker |
KE Rating |
Price (13-May) |
Target Price |
Mkt Cap (USD b) |
90D T/O (USD m) |
P/E (2013) |
P/E (2014E) |
EV/EBITDA (2013) |
EV/EBITDA (2014E) |
RoE (%) |
P/B (X) |
Yield (%) |
| INPEX |
1605 JT |
NR |
1,464.00 |
NR |
20.9 |
68.0 |
11.7 |
12.6 |
2.8 |
2.5 |
7.9 |
0.9 |
1.2 |
| JX Holding |
5020 JT |
NR |
511.00 |
NR |
12.5 |
62.2 |
8.0 |
8.1 |
9.9 |
9.6 |
8.7 |
0.7 |
3.1 |
| Showa Shell |
5002 JT |
NR |
1,038.00 |
NR |
3.8 |
16.1 |
6.5 |
11.6 |
5.5 |
7.0 |
21.9 |
1.3 |
3.5 |
| Tenon General |
5012 JT |
NR |
969.00 |
NR |
5.4 |
12.1 |
15.4 |
32.3 |
9.2 |
12.9 |
7.9 |
1.2 |
3.9 |
| Idemitsu |
5019 JT |
NR |
2,085.00 |
NR |
3.3 |
8.9 |
6.6 |
9.3 |
7.5 |
8.2 |
8.1 |
0.5 |
2.4 |
| Cosmo |
5007 JT |
NR |
195.00 |
NR |
1.6 |
6.0 |
n.a. |
6.3 |
10.4 |
9.2 |
-31.4 |
0.7 |
0.0 |
Malaysia Oil & Gas
| Company |
Ticker |
KE Rating |
Price (13-May) |
Target Price |
Mkt Cap (USD b) |
90D T/O (USD m) |
P/E (2013) |
P/E (2014E) |
EV/EBITDA (2013) |
EV/EBITDA (2014E) |
RoE (%) |
P/B (X) |
Yield (%) |
| Gas Malaysia |
GMB MK |
hold |
3.60 |
3.80 |
1.4 |
1.2 |
27.0 |
23.5 |
17.1 |
14.4 |
17.0 |
4.6 |
3.7 |
| Petronas Gas |
PTG MK |
hold |
23.48 |
23.50 |
14.4 |
4.4 |
22.3 |
28.0 |
17.4 |
15.1 |
21.4 |
4.5 |
2.3 |
Philippines Oil & Gas
| Company |
Ticker |
KE Rating |
Price (13-May) |
Target Price |
Mkt Cap (USD b) |
90D T/O (USD m) |
P/E (2013) |
P/E (2014E) |
EV/EBITDA (2013) |
EV/EBITDA (2014E) |
RoE (%) |
P/B (X) |
Yield (%) |
| Petron Corp |
PCOR PM |
buy |
12.28 |
15.90 |
2.6 |
2.8 |
27.3 |
15.4 |
14.2 |
10.0 |
6.9 |
1.2 |
0.4 |
| Phoenix Petroleum Philippines |
PNX PM |
buy |
6.20 |
7.22 |
0.2 |
0.1 |
14.1 |
8.5 |
9.5 |
7.3 |
12.7 |
1.4 |
1.3 |
Vietnam Oil & Gas
| Company |
Ticker |
KE Rating |
Price (13-May) |
Target Price |
Mkt Cap (USD b) |
90D T/O (USD m) |
P/E (2013) |
P/E (2014E) |
EV/EBITDA (2013) |
EV/EBITDA (2014E) |
RoE (%) |
P/B (X) |
Yield (%) |
| PetroVietnam Gas |
GAS VN |
buy |
90,000 |
103,000.00 |
8.1 |
1.8 |
13.9 |
11.8 |
9.3 |
7.4 |
40.8 |
5.1 |
6.3 |
Asian Oil & Gas Average
- P/E (2013): 12.3
- P/E (2014E): 11.2
- EV/EBITDA (2013): 7.4
- EV/EBITDA (2014E): 6.3
- RoE (%): 13.2
- Yield (%): 1.5
Oil Service Valuation Comparison
| Company |
Ticker |
KE Rating |
Price (13-May) |
Target Price |
Mkt Cap (USD b) |
90D T/O (USD m) |
P/E (2013) |
P/E (2014E) |
EV/EBITDA (2013) |
EV/EBITDA (2014E) |
RoE (%) |
P/B (X) |
Yield (%) |
| Anton Oilfield Services |
3337 HK |
NR |
5.34 |
NR |
1.5 |
5.2 |
23.8 |
20.6 |
11.7 |
9.5 |
18.0 |
3.9 |
1.3 |
| China Oilfield Services-H |
2883 HK |
NR |
18.18 |
NR |
12.2 |
26.0 |
9.6 |
9.4 |
7.7 |
7.0 |
19.3 |
1.7 |
3.0 |
| Chu Kong Petroleum |
1938 HK |
NR |
2.29 |
NR |
0.3 |
0.4 |
45.4 |
14.0 |
19.6 |
13.3 |
1.4 |
0.5 |
0.0 |
| Hilong Holding |
1623 HK |
NR |
4.17 |
NR |
0.9 |
4.9 |
15.9 |
11.2 |
7.5 |
6.3 |
14.4 |
2.1 |
2.3 |
| Honghua Group |
196 HK |
NR |
1.83 |
NR |
0.8 |
2.9 |
8.5 |
7.0 |
6.2 |
5.4 |
11.7 |
1.0 |
3.3 |
| Sinopec Engineering-H |
2386 HK |
NR |
8.40 |
NR |
4.8 |
8.0 |
7.2 |
7.0 |
3.4 |
3.0 |
26.1 |
1.4 |
4.9 |
| SPT Energy |
1251 HK |
NR |
4.33 |
NR |
0.9 |
3.7 |
17.4 |
14.3 |
8.2 |
6.2 |
17.8 |
2.9 |
1.5 |
Summary of Analyst Contacts
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.
- The report highlights the mixed performance of the oil and gas market and the impact of geopolitical and market conditions on company performance and valuations.
