Energy stocks have
outperformed the SET index over the past four months, aided
by a 32% surge in crude oil prices to near 29-month highs
and attractive dividend yields of about 5-7%. The SET energy
sector has jumped 12.3% since October 20, more than double
the 5.8% rise in the SET index over the same period.
On Wednesday NYMEX crude oil
futures closed at US$37.16 a barrel after earlier surging to
US$37.45, their highest levels since September 2000. Even
though oil prices are expected to weaken once the US-Iraq
conflict is resolved, we remain bullish on the energy sector
given that most stocks are trading at substantial discounts
to our fair value prices.
Moreover, we have
conservatively used an average oil price of US$25/a barrel
to forecast 2002 earnings. Our top picks in the sector are BANPU,
PTT, PTTEP and RATCH.
|
Energy sector |
|
Company |
Price
(Bt) |
Target
(Bt) |
Recommendation |
PER
(x) |
EV/EBITDA
(x) |
P/CF
(x) |
Dividend
(Bt) |
Yield
(%) |
|
|
|
|
|
2003F |
2003F |
2003F |
|
|
|
BAFS |
7.95 |
10.50 |
ACCUMULATE |
7.3 |
4.5 |
6.0 |
0.45 |
5.7% |
|
BANPU |
37.50 |
45.00 |
BUY |
5.3 |
5.6 |
3.7 |
2.50 |
6.7% |
|
EGCOMP |
41.00 |
59.00 |
HOLD |
5.8 |
4.1 |
3.9 |
2.25 |
5.5% |
|
PTT |
44.00 |
49.50 |
BUY |
5.1 |
3.9 |
3.6 |
2.50 |
5.7% |
|
PTTEP |
123.00 |
162.00 |
BUY |
6.3 |
4.6 |
6.5 |
6.00 |
4.9% |
|
RATCH |
19.80 |
22.00 |
BUY |
5.3 |
5.6 |
7.0 |
1.30 |
6.6% |
|
SUSCO |
0.84 |
0.96 |
ACCUMULATE |
18.3 |
7.3 |
10.5 |
- |
- |
|
Source : Kim Eng Research |
BAFS < Bt7.95 :
ACCUMULATE >
Bangkok Aviation Fuel Services (BAFS) is
expected to report 4Q02 normalised earnings of Bt83mn, up 42% from the
previous year. FY02 normalised profit should dip 3% to Bt330mn due to
the dollar weakness and a reduction in flights by Qantas Airways and
British Airways to Don Muang Airport last year. The major earnings
driver is the 5.5% increase in the total number of flights serviced by
BAFS from 95,771 in 2001 to 101,015 last year. A 1.6% increase in volume
uplift will also support BAFS' earnings. We expect the company to pay a
Bt0.21 dividend for 2H02 after paying an interim dividend of Bt0.25 in
1H02.
|
BAFS income
statement |
|
Income
Statement (Mn Bt) |
4Q02F |
3Q02 |
QOQ |
4Q01 |
YOY |
FY01 |
FY02F |
% |
|
Sales |
219 |
210 |
4% |
223 |
(2%) |
882 |
882 |
0% |
|
COGs |
55 |
63 |
(13%) |
74 |
(26%) |
225 |
252 |
12% |
|
Gross profits |
164 |
147 |
11% |
149 |
10% |
658 |
631 |
(4%) |
|
Gross margin (%) |
75% |
70% |
N.A. |
67% |
N.A. |
75% |
71% |
N.A. |
|
SG&A |
39 |
32 |
22% |
49 |
(19%) |
141 |
134 |
(5%) |
|
Interest expense |
0.0 |
0.4 |
(100%) |
0.4 |
N.A. |
1.9 |
0.7 |
(62%) |
|
Net profit |
83 |
78 |
6% |
(357 ) |
N.A. |
(76 ) |
330 |
(533%) |
|
EPS (Bt) |
0.24 |
0.23 |
6% |
(1.43) |
N.A. |
(0.31) |
1.04 |
(441%) |
Source : Kim Eng Research
BANPU < Bt37.50 :
BUY >
Final quarter earnings of Banpu Plc
(BANPU) are projected to surge 197% yoy to Bt372mn due mainly to the
booking of a Bt188mn dividend from Tri Energy (TECO). Also, the
company 's normalised earnings should turn from a Bt874mn loss to a
net profit of Bt952mn following its acquisition of an Indonesia coal
mining business, Indocoal, last March. This boosted BANPU's coal
sales volume from 5.5 million tonnes in 2001 to 12 million tonnes
last year, with output expected to reach 15 million tonnes in 2003.
Also fuelling earnings growth this year is a rebound in spot coal
prices from a low of $25/tonne last June to current levels of
$32/tonne. We expect the company to pay a 2H02 dividend of Bt1 after
rewarding shareholders with a Bt1.50 interim dividend for 1H02.
|
BANPU income
statement |
|
Income
Statement (Mn Bt) |
4Q02F |
3Q02 |
QOQ |
4Q01 |
YOY |
FY01 |
FY02F |
% |
|
Sales |
3,592 |
3,048 |
18% |
1,252 |
187% |
5,734 |
11,475 |
100% |
|
COGs |
2,746 |
2,258 |
22% |
845 |
225% |
4,776 |
8,468 |
77% |
|
Gross profits |
845 |
791 |
7% |
407 |
108% |
958 |
3,007 |
214% |
|
Gross margin (%) |
24% |
26% |
N.A. |
33% |
N.A. |
17% |
26% |
N.A. |
|
SG&A |
432 |
420 |
3% |
248 |
74% |
1,033 |
1,438 |
39% |
|
Interest expense |
165 |
168 |
(2%) |
131 |
26% |
466 |
693 |
49% |
|
Net profit |
372 |
114 |
227% |
125 |
197% |
2,314 |
1,643 |
(29%) |
|
EPS (Bt) |
1.75 |
0.54 |
227% |
0.60 |
193% |
11.04 |
6.21 |
(44%) |
Source : Kim Eng Research
EGCOMP < Bt41.00 :
HOLD >
Stronger demand for electricity,
coupled with a decline in maintenance costs, should help Electricity
Generating (EGCOMP) post a 4Q02 net profit of Bt740mn, up 28% yoy.
EGCOMP's defensive qualities are underlined by a projected dividend
of Bt1 for 2H02 operations after it paid a 1H02 dividend of Bt1.25,
representing an annualised yield of 5.5%. We expect earnings growth
will come from new power projects including Gulf Power and Nam Thuen
2.
|
EGCOMP income
statement |
|
Income
Statement (Mn Bt) |
4Q02F |
3Q02 |
QOQ |
4Q01 |
YOY |
FY01 |
FY02F |
% |
|
Sales |
2,776 |
2,862 |
(3%) |
2,513 |
10% |
10,732 |
11,529 |
7% |
|
COGs |
1,142 |
1,123 |
2% |
1,117 |
2% |
4,033 |
4,531 |
12% |
|
Gross profits |
1,634 |
1,739 |
(6%) |
1,396 |
17% |
6,699 |
6,998 |
4% |
|
Gross margin (%) |
59% |
61% |
N.A. |
56% |
N.A. |
62% |
61% |
N.A. |
|
SG&A |
267 |
178 |
50% |
301 |
(11%) |
889 |
870 |
(2%) |
|
Interest expense |
699 |
713 |
(2%) |
741 |
(6%) |
3,299 |
2,809 |
(15%) |
|
Net profit |
740 |
531 |
39% |
577 |
28% |
2,939 |
3,543 |
21% |
|
EPS (Bt) |
1.41 |
1.01 |
39% |
1.10 |
28% |
5.59 |
6.74 |
21% |
Source : Kim Eng Research
PTT < Bt44.00 :
BUY >
Price increases for crude oil, LPG
and petrochemicals are expected to trigger a 92% yoy surge in the
4Q02 earnings of PTT Plc (PTT) to Bt5.84bn. For FY02, we project a a
net profit of Bt23bn (EPS of Bt8.23), up 7% yoy. The sharp gains in
crude oil price will boost PTT's sales but won't add much to the
bottom line. However, the 40% yoy surge in LPG prices from
$226/tonne in 4Q01 to $316/tonne in 4Q02 should prove an important
earnings driver. PTT's performance will also be aided by a
turnaround in previously loss-making petrochemical affiliates,
notably Aromatics Thailand Co (ATC). Given its strong cash flow, we
believe PTT will announce a dividend of at least Bt2.50,
representing a 5.7% yield at the current share price.
|
PTT income
statement |
|
Income
Statement (Mn Bt) |
4Q02F |
3Q02 |
QOQ |
4Q01 |
YOY |
FY01 |
FY02F |
% |
|
Sales |
110,046 |
104,806 |
5% |
88,118 |
25% |
377,902 |
397,625 |
5% |
|
COGs |
95,809 |
88,729 |
8% |
71,613 |
34% |
313,595 |
329,074 |
5% |
|
Gross profits |
14,237 |
16,076 |
(11%) |
16,505 |
(14%) |
64,307 |
68,551 |
7% |
|
Gross margin (%) |
13% |
15% |
N.A. |
19% |
N.A. |
17% |
17% |
N.A. |
|
SG&A |
3,037 |
2,893 |
5% |
3,749 |
(19%) |
11,395 |
11,124 |
(2%) |
|
Interest expense |
2,398 |
2,447 |
(2%) |
2,457 |
(2%) |
10,626 |
9,786 |
(8%) |
|
Net profit |
5,838 |
4,393 |
33% |
3,043 |
92% |
21,565 |
23,020 |
7% |
|
EPS (Bt) |
2.09 |
1.57 |
33% |
1.09 |
92% |
7.71 |
8.23 |
7% |
Source : Kim Eng Research
PTTEP < Bt123 :
BUY >
We expect to see 12% growth in the
2002 earnings of PTT Exploration and Production (PTTEP) to Bt12.2bn.
Earnings in 4Q02, however, are forecast to soar 55% yoy to Bt3,245mn
due to increases in both petroleum volume sales and selling prices.
PTT's outlook this year remains promising as it plans to increase
petroleum sales to approximately 107,800 barrels of oil equivalent
per day (BOED) from the current 103,000 BOED. Additionally, Bongkot
and Pailin, which contribute two-thirds of PTTEP‘s total earnings,
hiked their natural gas prices by about 15% last October. PTTEP is
projected to pay a Bt6 dividend for 2002 operations, a yield of
4.9%.
|
PTTEP income
statement |
|
Income Statement (Mn Bt) |
4Q02F |
3Q02 |
QOQ |
4Q01 |
YOY |
FY01 |
FY02F |
% |
|
Sales |
8,506 |
8,258 |
3% |
6,209 |
37% |
27,518 |
30,398 |
10% |
|
COGs |
3,020 |
2,885 |
5% |
1,394 |
117% |
9,243 |
11,058 |
20% |
|
Gross profits |
5,486 |
5,373 |
2% |
4,815 |
14% |
18,275 |
19,340 |
6% |
|
Gross margin (%) |
65% |
65% |
N.A. |
78% |
N.A. |
66% |
64% |
N.A. |
|
SG&A |
395 |
319 |
24% |
381 |
4% |
1,089 |
1,311 |
20% |
|
Interest expense |
336 |
347 |
(3%) |
432 |
(22%) |
1,837 |
1,400 |
(24%) |
|
Net profit |
3,245 |
3,075 |
6% |
2,094 |
55% |
10,895 |
12,231 |
12% |
|
EPS (Bt) |
4.98 |
4.72 |
6% |
3.21 |
55% |
16.71 |
18.76 |
12% |
Source : Kim Eng Research
SUSCO < Bt0.84 :
ACCUMULATE >
Fourth quarter earnings of Siam
United Services (SUSCO) are estimated at Bt2mn compared to a loss of
Bt31mn in 4Q01 due to a doubling of gross margins after it closed
loss-making petrol stations. We expect SUSCO to post a 2002 net
profit of Bt134mn, which includes an extraordinary gain of Bt113mn
from debt restructuring. The company recently sold land in Songkha
province for Bt88mn, which will allow the company to record a Bt5mn
gain in 1Q03. Money from land sales will be used to retire loans,
which should help SUSCO lower its debt/equity ratio from 0.94x to
0.6x at the end of March. Other positive new concerns debt
restructuring and SUSCO's negotiations to convert loans of Bt100mn
now owned by the Thai Asset Management Corporation (TAMC) into 100mn
new shares at a par value of Bt1. If TAMC approves the plan, as we
expect, SUSCO will book a debt restructuring profit of Bt28mn and
save interest expenses of about Bt20mn a year.
|
SUSCO income
statement |
|
Income
Statement (Mn Bt) |
4Q02F |
3Q02 |
QOQ |
4Q01 |
YOY |
FY01 |
FY02F |
% |
|
Sales |
720 |
758 |
(5%) |
592 |
21% |
3,012 |
2,925 |
(3%) |
|
COGs |
674 |
709 |
(5%) |
574 |
18% |
2,859 |
2,714 |
(5%) |
|
Gross profits |
45 |
49 |
(7%) |
19 |
142% |
153 |
212 |
38% |
|
Gross margin (%) |
6% |
6% |
N.A. |
3% |
N.A. |
5% |
7% |
N.A. |
|
SG&A |
49 |
61 |
(20%) |
47 |
4% |
223 |
215 |
(4%) |
|
Interest expense |
9 |
9 |
(5%) |
8 |
7% |
39 |
35 |
(9%) |
|
Net profit |
2 |
103 |
(98%) |
(31 ) |
N.A. |
(62 ) |
135 |
N.A. |
|
EPS (Bt) |
0.00 |
0.12 |
(98%) |
(0.03) |
N.A. |
(0.07) |
0.15 |
N.A. |
Source : Kim Eng Research
|
