Kiatnakin Phatra Sec. Expects Solid Performance and Strong Outlook for PTTEP in 2H23

Kiatnakin Phatra Securities (KKPS) believed that PTT Exploration and Production Public Company Limited (SET: PTTEP) will perform a strong growth in the second half of this year after reporting a solid 2Q23 results last week.

The brokerage firm noted that PTTEP’s 20.1 billion baht of core 2Q NPAT was higher than its estimate of 18.5 billion baht on lower-than-expected unit cost. Meanwhile, a smaller extra item of 861 million baht contributed to PTTEP’s 21 billion baht of net profit for the quarter. The results stand out from the rest of the energy companies.

KKPS added that the consensus estimate kicked off PTTEP’s NPAT downgrade cycle in January until August. However, with a solid core 1H23 NPAT, the reversal should begin and believe that PTTEP is sitting on an earnings upside.

PTTEP’s management made a conservative guidance for its performance in the second half of the year, expecting the average sales volume for the third quarter and full year 2023 to be approximately 470,000 and 464,000 barrels of oil equivalent per day, respectively. Meanwhile, the average gas price for the third quarter and full year 2023 is estimated at approximately 5.8 and 6.0 USD/MMBTU, respectively.

Based on BofA’s Brent crude oil price forecast of $80/bbl for 3Q23 and $82/bbl for 4Q23, KKPS expected PTTEP to generate core NPAT of around 19.5 billion baht in 3Q and 4Q. In addition, KKPS maintained its ‘BUY’ rating on attractive valuations, superior earnings quality, solid financial positives and strong cash flow generation with a target price at THB182.00 per share.