Prolonged strong core earnings growth through 4Q22 and expectations of higher oil prices amid OPEC’s massive production cut should trigger PTTEP’s share price rally. The current valuation is attractive—a YE23 PBV of 1.3x (0.7SD below its long-term mean).
3Q22 to be another strong quarter
We expect PTTEP to post strong core earnings of Bt19,102m, up 74% but down 14% QoQ (stripping out assumed extra items—mainly gain on derivatives and loss on divestment of assets) and a net profit of Bt18,032m, up 89% YoY but down 13% QoQ for 3Q22. The YoY core profit growth drivers would be: 1) greater petroleum sales volume and 2) a higher ASP. Meanwhile, the key factors behind the QoQ core earnings contraction would be: 1) a lower ASP and 2) a higher unit cost.