UEG(467.HK):LIMITED OPERATIONAL RISK IN THE MIDDLE EAST;BENEFICIARY OF HIGHER CRUDE PRICE
UEG(467.HK):LIMITED OPERATIONAL RISK IN THE MIDDLE EAST;BENEFICIARY OF HIGHER CRUDE PRICE
Given the escalation of the Israel-Hamas war in Gaza, we do not rule out the possibility of an extension of conflicts to other countries in the Middle East. That said, we believe the operational risk to UEG's assets in Egypt is limited. While we trim our 2023E/24E earnings forecasts by 9.5%/2.0% after fine-tuning our oil & gas price assumptions to reflect the 3Q pricing, a prolonged Israel-Hamas war will lend support to the crude price in 4Q, in our view. Our Brent assumptions in 4Q23/2024E are US$95/87 per barrel. Our TP is revised down to HK$1.45 from HK$1.60 (based on an unchanged target P/E of 10x, a 30% discount to the historical average). Further increases in crude price will serve as a key catalyst.
鑑於以色列-哈馬斯在加沙的戰爭升級，我們不排除衝突擴大到中東其他國家的可能性。儘管如此，我們認爲聯合能源集團在埃及的資產面臨的運營風險是有限的。儘管我們在微調了石油和天然氣價格假設以反映第三季度的定價後，將2023年E/24E的收益預期下調了9.5％/2.0％，但我們認爲，長期的以色列-哈馬斯戰爭將支撐第四季度的原油價格。我們在2023年第四季度的布倫特原油假設爲每桶95美元/87美元。我們的目標價從1.60港元下調至1.45港元（基於10倍不變的目標市盈率，較歷史平均水平折扣30％）。原油價格的進一步上漲將成爲關鍵的催化劑。
Location of UEG's Egypt assets. While Egypt shares the same border with Gaza, UEG's oil and gas fields in Egypt are located >500km away from Gaza (Figure 1). Therefore, we think it's less likely for the Israel-Hamas war to affect the operation of UEG's oil & gas fields in Egypt. In 1H23, Egypt accounted for only 11% of UEG's total revenue. We expect the contribution from Egypt to further reduce over the coming years as Iraq will be the key growth driver.
聯合能源集團在埃及的資產所在地。雖然埃及與加沙有相同的邊界，但聯合能源集團在埃及的油氣田距離加沙>500公里（圖1）。因此，我們認爲以色列-哈馬斯戰爭不太可能影響聯合能源集團在埃及的油氣田的運營。在23年上半年，埃及僅佔聯合能源集團總收入的11％。我們預計，由於伊拉克將成爲主要的增長動力，埃及的捐款將在未來幾年進一步減少。
Support to crude price in the near term. Brent crude price averaged at ~US$86/bbl in 3Q23 (-13% YoY; +7% compared with 1H23). Apart from the tension in the Middle East, we see several underlying factors to support the oil price: 1) The US Department of Energy stopped selling crude oil from Strategic Petroleum Reserve (SPR) in Jul and has started buying back crude oil since Aug to refill the SPR which is at the lowest level in >30 years; 2) Production cuts by OPEC+ serve as a reaction to any unfavorable change in oil demand.
短期內支撐原油價格。布倫特原油價格在23年第三季度平均約爲每桶86美元（同比下降13％；與23年上半年相比增長7％）。除了中東的緊張局勢外，我們還看到了支撐油價的幾個潛在因素：1）美國能源部於7月停止出售戰略石油儲備（SPR）的原油，並自8月起開始回購原油，以補充處於>30年來的最低水平的SPR；2）歐佩克+的減產是對石油需求任何不利變化的反應。
UEG's output target unchanged. UEG has an oil & gas output growth target (-5.5% to +2.2% YoY) this year and we see a chance for UEG to be close to the high end of the range. We expect the volume growth to accelerate to 16%/18% in 2024E/25E, driven by Iraq's output growth.
UEG的產出目標保持不變。聯合能源集團今年的石油和天然氣產量增長目標（同比下降5.5％至+ 2.2％），我們認爲聯合能源集團有可能接近該區間的高端。我們預計，在伊拉克產出增長的推動下，銷量增長將在2024E/25E中加速至16％/18％。
Risk factors: 1) Decline in crude & gas price; 2) risk of impairment loss in Pakistan assets; 3) rising receivables; and 4) higher-than-expected capex.
風險因素：1）原油和天然氣價格下跌；2）巴基斯坦資產減值損失風險；3）應收賬款增加；4）資本支出高於預期。
譯文內容由第三人軟體翻譯。