Petronas generally met most of its activity expectations for 2022.
The latest 2023-25 Petronas Activity Outlook edition, points to a more positive outlook for the oil industry, notably for its: (i) drilling, (ii) fabrication, (iii) OSV for drilling support, (iv) pipelines & (v) maintenance ops. Velesto, MMHE, Icon, Dialog & WSC are the main beneficiaries of this. Maybank IB highlight on notable key BUYs in the sector which are Yinson, BArmada, and Hibiscus.
PAO 2022 report card – in retrospect, Petronas’ activities were in line with its 2022 aspiration 5 segments mainly: (i) drilling, (ii) plant turnaround, (iii) SURF, (iv) decommissioning and (v) offshore maintenance ops met its target.
Meanwhile, 4 segments: (i) hook-up & commissioning (HUC), (ii) equipment & material (supply of line pipes), (iii) offshore installation and (iv) underwater services segments underperformed during the year, while the offshore fabrication and OSV, supporting production ops were the 2 key outperformers.
Potential beneficiaries in PAO 2023-25
Based on the latest PAO 2023-25 outlook, PETRONAS appears to paint a more positive picture. 5 segments (drilling, fabrication, OSV, pipelines and maintenance ops) are expected to see an increase in activities in 2023, a positive. We see Velesto, MMHE, Icon, Wah Seong and Dialog as key beneficiaries in these respective fields of its domestic activities over the next 3 years. 100 for 100
All in, the research house expects Petronas to meet the MYR100b core net profit estimate for 2022. The USD100/bbl (dated Brent) oil price estimate for 2023 is unchanged, with an upside bias. Maybank IB do not rule out a higher oil price outlook in FY23 considering the continued tightness in the global supply market, due to the: (i) prolonged structural under-investment since 2015 and (ii) OPEC+’s discipline as a swing producer (to meet output and price expectations).
Meanwhile, demand for oil is projected to pick up in 2023, fuelled by the re-opening of China’s economy and increased flight travels worldwide. A widening imbalance will lead to a higher oil price scenario.
