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PTT Pcl (SET:PTT) is Thailand’s largest fully integrated gas and oil company and the eighth largest energy company in the Asia/Pacific rim region, according to Platts. The company, which is two-thirds owned by Thailand’s government, operates three business sectors including upstream petroleum and natural gas, downstream petroleum, and coal. It procures, transmits and distributes natural gas through subsea natural gas pipelines in the Gulf of Thailand and a network of liquefied petroleum gas (LPG) terminals.
PTT is also involved in electricity generation, petrochemical products, oil and gas exploration and production, and petrol retailing businesses through its affiliated companies, including PTT Exploration and Production, PTT Utility Co. Ltd., PTT Global Chemical, PTT Retail Management Co, PTT Asia Pacific Mining and PTT Green Energy.
The company said on February 19, 2016, that its fourth-quarter 2015 revenues were 469.58 billion baht, down 27.07% year-on-year, missing the 628.89 billion baht consensus estimate of 5 analysts, according to the Financial Times. PTT posted a net profit of 188 million baht in the fourth-quarter, missing analysts’ forecast for a net profit of between 400 million and 2 billion baht, citing a huge impairment loss from its coal business, according to Reuters.
According to the Financial Times, PTT reported a dividend of 10.00 baht a share in 2015, which represents a 9.9% decrease from 2014. The 20 analysts covering the company expect dividends to increase to 10.17 baht a share for the upcoming fiscal year, a small increase of 1.72%. The next earnings announcement from PTT is expected on May 11.
In early March, PTT CEO Tevin Vongvanich told CNBC Asia that it was a good time to acquire companies as the cash balance of the company, and its subsidiaries, were healthy at the moment. "The prices of upstream assets have come down quite a lot. We are thinking of entering into the unconventional, the shale oil business in the U.S. or elsewhere," he said.
Technically, shares of PTT bounced off the lower trendline support of the downtrend channel chart pattern at 197 baht per share, or a 6-year low, along with crude oil prices. The stock is now trading at 281 baht per share, up 42.64% from the February low and is in overbought territory. There could be another 6% to 12% upside potential until the stock bumps into major head resistances at 300 and 315 baht per share. We believe that the recent oil rally is not sustainable and hence, PTT could make a pullback as the downtrend channel remains intact and the easy money has already been made.
As of March 5, 2016, the consensus forecast amongst 22 investment analysts polled by the Financial Times advises investors that the company will outperform the market, with the median 12-month price target of 285.50 baht per share.
Disclosure: No position and no recommendation. |
