Stock of the 26 June 2023 Week: PTTEP TH SDR (SGX: TPED)

Current price: S$ 5.73

Price/Book: 1.23x

Price/Earnings: 7.43x

Dividend Yield: 6.2%

Source: SGX and SET as of 25 June 2023

What happened?

• $PTT Exploration & Production NVDR(TPED.SI)$ is a leading producer of natural gas and crude oil in Southeast Asia that could benefit if oil prices recover.

What are the key drivers?

• Close to 60% of $PTT Exploration & Production NVDR(TPED.SI)$ ’s assets are in Thailand and other parts of Southeast Asia. The company’s petroleum production accounts for 62% of Thailand’s total production volume in 2022.

• $PTT Exploration & Production NVDR(TPED.SI)$has a competitive average unit cost of about US$28/bbl. With higher energy prices, its average selling price rose to US$53/BOE in 2022 from US$43/BOE in 2021.

• $PTT Exploration & Production NVDR(TPED.SI)$ targets to grow its production volume by 6.3% annually on average from 2022-27. This is supported by its Proved Reserves (P1) lasting 6.8 years, and Proved Reserves + Probable Reserves (P1+P2) of 10.7 years as of December 2022.

What are the catalysts to look out for?

• The US Energy Information Administration (EIA) forecasts that Brent crude oil spot price will average US$79/bbl in the second half of 2023 and US$84/bbl in 2024, above the price of US$74/bbl as of 23 June 2023.

• $WTI Crude Oil - main 2308(CLmain)$ prices could rise further with an escalation of geopolitical uncertainty in Russia or a disruption in supply.

How’s the valuation of the stock?

• $PTT Exploration & Production NVDR(TPED.SI)$ has a dividend policy to pay out dividends of not less than 30% of net profit. The company paid out a dividend per share of THB 9.25 in 2022, implying a dividend yield of 6.2%.