Prolonged strong core earnings growth into 2Q22 and throughout 2022 and potential flows of consensus earnings upgrades should trigger PTTEP’s share price rally. The current valuation is still attractive—a YE22 PBV of 1.3x (0.8SD below its long-term mean of 2.1x) and a good 2022 dividend yield of 5.5% (against 2.6% for SET).
Record high quarterly core earnings expected for 1Q22
We expect PTTEP to post record high quarterly core earnings of Bt20,007m, up 131% YoY and 20% QoQ (stripping out assumed extra items—mainly loss on derivatives) and a net profit of Bt11,974m, up 4% YoY and 13% QoQ for 1Q22. The core profit growth drivers would be: 1) greater YoY and QoQ petroleum sales volume, 2) a higher YoY and QoQ mean petroleum sales price, and 3) a lower QoQ unit cost.