Venturing Into the Unknown for the Days Ahead
Key Takeaways:
▪️Brent crude oil prices shrugged by -17.7% YoY USD78.1/bbl in Nov-23 due to rising production from the US and non-OPEC countries offset the rise. Additionally this downturn might continue in FY24 as the US economy is projected to a slower growth.
▪️Throughout FY23E, natural gas prices experienced a significant decline of -19.4% YTD as economy activities declined, but is expected to rise by a limited amount of +1.6% in FY24F due to disruption in supply caused by the closure of a major natural gas production facility in Israel affected by the war.
▪️Indonesia’s government has cut the production target for oil in FY24F to 635,000 BOPD (versus 660,000 BOPD in FY23E) as the realization this year fell below expectations. Additionally, the production of natural gas has been slightly lowered to 1,033 MBPD in FY24F (vs 1,100 MBPD for FY23E).
▪️We call a NEUTRAL rating for oil & gas sector and BUY recommendation for AKRA with TP of IDR1,700/share with 6.7x EV/EBITDA and MEDC with TP of IDR2,050/share with 1.5x EV/EBITDA, while calling a HOLD rating for PGAS with TP of IDR1,200/share 1.8x EV/EBITDA for FY24F.
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