20170106-Maybank_KERPL-Regional_Oil___Gas_11页_393kb

Regional Oil & Gas Summary

Core Content

The document provides an overview of the oil and gas market trends and company valuations in various regions, including Asia, the Middle East, and other global markets, as of January 5, 2017. It highlights the performance of key oil prices, the impact of OPEC production cuts, and the investment outlook for selected companies.

Key Market Trends

• Oil Prices:

  • Brent crude remained unchanged at USD56.46/bbl.
  • WTI crude rose by 0.9% to USD53.76/bbl.
  • The LNG Northeast Asia CFR price was USD8.75/MMBtu, with a 1-month forward price from ICAP.

• Production Cuts and Market Impact:

  • OPEC and non-OPEC members agreed to reduce production, with non-OPEC members cutting 558k bpd starting January 2017.
  • Iraq began reducing its oil production in line with OPEC commitments.
  • Despite production cuts, oil prices turned negative due to a large build in refined crude products, especially gasoline.

• U.S. Energy Outlook:

  • The U.S. could become a net energy exporter by 2026, according to the EIA.
  • Crude oil imports have been declining, while natural gas exports are increasing.

Main Reports and Recommendations

UMW Oil & Gas

• Action: Buy
• Details: Bags charter for Naga 7 for 18 months.
• TP (Target Price): USD1.16
• Upside: 27% from current price.

Indorama Ventures

• Action: Buy
• Details: Initiates as the world's largest integrated PET producer.
• TP: THB40
• EV/EBITDA: 9.7x
• Forecast: Core net profit to grow at a 26% 2-year CAGR.

Singapore Offshore & Marine

• Action: Negative
• Details: 2017 may still be a challenging year due to severe asset oversupply in the oil services sector.
• Utilisation Improvements: May not be fast enough to offset cash flow issues.

Thailand Energy Sector

• Action: Positive
• Details: Recommends being selective due to attractive valuations and fundamentals.
• Recommended Stocks: PTTGC and PTT.

Oil and Gas Valuation Table

Analysts Contact

• 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 x 8082 | chuyen.le@maybank-kimeng.com.vn
• Truong Quang Binh (VIETNAM): (84) 444555888 x 8087 | binh.truong@maybank-kimeng.com.vn

Key Insights

• The global oil market is experiencing mixed reactions to production cuts and inventory changes.
• OPEC's production reduction is expected to support oil prices, but the U.S. is becoming a significant player in the energy export market.
• The Singapore oil services sector is under pressure due to oversupply and may not see significant improvement in utilization in the near term.
• The Thailand energy sector is advised to be selective, with PTTGC and PTT being highlighted as having attractive valuations and fundamentals.
• Investment recommendations are based on earnings growth, valuation metrics, and market sentiment.

Conclusion

The document underscores the ongoing dynamics in the global oil and gas market, emphasizing the impact of OPEC production cuts, U.S. energy export potential, and regional investment opportunities. It also provides detailed valuation data and analyst contacts, offering a comprehensive view for investors and market participants.