PTTEP Jumps 7% in Anticipation of an Oil-Price Rebound, Analyst Recomm. BUY at TP ฿95

The share price of PTT Exploration and Production Public Company Limited (PTTEP) surged in the afternoon session after announcing its 1Q20 earnings plunging by 30%, while investors are expecting oil prices to rebound.

 

As of 15:50 local time in Thailand, PTTEP rose ฿5.25/share or 6.71% to ฿83.50/share with a trading value of 3,534 million baht. The highest share price was ฿84.25/share and the lowest was ฿81.25/share.

PTTEP asserted that the supply side is expected to be more balanced since OPEC+ has successfully struck a historic deal on April 12, 2020 to cut production by 9.7 million barrels per day during May to June 2020, then switch to 7.6 million barrels per day during July to December 2020, and 5.4 million barrels per day during January 2021 to April 2022, where other G20 Countries are also expected to cut their production by additional 5 million barrels per day by market driven mechanism. Moreover, the supply growth is expected to significantly slow down as several oil producers have started cutting their capital spending and postpone investments due to oil price collapse.

Therefore, the oil prices are expected to be bottomed out in 2Q20, and rebound in 2H20 with yearly average prices around $35-$40 per barrel.

 

Maybank Kim Eng gave a “BUY” recommendation on PTTEP with a target price at ฿95.00/share.

Maybank stated that PTTEP’s share price has responded to the pressure from world crude oil prices which have fallen to a certain extent due to oversupply. However, in the short-term, OPEC+ and the US may have more ways to solve the problem which may support the price of crude oil to recover. In addition, it is expected that the heavy sell-off recently should cause PTTEP to be in the underdown state. That may be a time for accumulating stocks.