KUALA LUMPUR: Maybank Investment Bank (Maybank IB) expects Petronas to replicate its performance in the first half of the year (H1 2022) in the second half, which would result in the national oil company registering a core net profit of about RM100 billion in the financial year ending Dec 31, 2022 (FY22).
The investment bank also sees oil prices remaining elevated, especially in the fourth quarter as the winter period approaches and geo-political risks remain high.
“Our average crude oil estimate for FY22 is unchanged, at US$100 per barrel (Brent). We do not rule out a higher oil price outlook in FY23 considering the continued tightness in the global supply market due to the prolonged structural under-investment since 2015,” said Maybank IB in a research note yesterday.
The world’s fourth biggest LNG exporter recorded a core net profit of RM25 billion in the second quarter, a 15 per cent increase quarter-on-quarter, and this took H1 2022 core earnings to RM48 billion, a 239 per cent jump year-on-year, driven by the higher oil price.
Correspondingly, net cash grew 14 per cent quarter-on-quarter to RM103 billion in the second quarter while its free cash flow improved by 2.2 times quarter-on-quarter to RM44 billion.
Recently, Petronas also raised its capital expenditure (capex) target for FY22 to RM60 billion from RM50 billion previously.
“This is hardly a surprise and is in line with most of its global peers’ aspirations. Also, as per its previous statements, Petronas targets a 50 per cent improvement in cashflow from operations by 2025 and a 30 per cent improvement in revenue by 2030,” noted Maybank IB.
Meanwhile, Hong Leong Investment Bank (HLIB) believes that the higher capex for 2022 would augur well for the local oil and gas sector as most of the listed service providers in the oil and gas service equipment (OGSE) segment are heavily reliant on Petronas as a major client and would serve to be direct beneficiaries of this development.
HLIB has maintained an “overweight” call on the oil and gas sector and placed Dagang NeXchange Bhd as one of its top picks as it stands to be a direct beneficiary of elevated oil prices. — BERNAMA
