Energy
Those were the days
With commodity prices falling significantly and profitability now in question, we
make major revisions to our forecasts. We like Banpu for its coal exposure and
still prefer upstream players PTTEP and PTTCH. We continue to dislike refiners
and have downgraded PTT to Sell due to its heavy downstream exposure.
Key recommendations & forecasts
Reuters Year end Recom Price Target
price
EPS
1fcst
PE
1fcst
Banpu¹ BANP.BK Dec 2008 Buy B220.00 B451.00 44.60 4.94
PTT Aromatics¹ PTTAR.BK Dec 2008 Sell B9.70 B5.60 -2.46 n/m
PTT Chemical¹ PTTC.BK Dec 2008 Buy B31.25 B49.00 9.44 3.31
PTTEP¹ PTTE.BK Dec 2008 Buy B100.00 B152.00 13.20 7.57
PTT¹ PTT.BK Dec 2008 Sell B156.00 B127.00 23.80 6.55
Thai Oil¹ TOP.BK Dec 2008 Sell B22.00 B15.10 3.22 6.83
1. Normalised EPS - Post-goodwill amortisation and pre-exceptional items
Source: Company data, ABN AMRO forecasts
Priced at COB 13 January 2009
Major revisions to product prices
Our Indian oil and gas team has assumed worst-case scenarios in its forecasts to reflect
weak demand and global recession. We have cut our oil prices forecasts by 21% for 2009
and 19% for 2010, but maintain our long-term oil price at US$75/bbl. The team also lowered
its refining margin assumptions to US$2/bbl for 2009 and US$2.5/bbl for 2010, petrochemical
prices have been cut due to lower naphtha prices, and coal price forecasts have been
lowered to factor in the weak economy.
Earnings lowered across the board
Factoring in our new assumptions, we have lowered our earnings estimates considerably
across the board. The biggest change in earnings is for the refineries and PTT. We have
slashed our earnings estimate for PTTAR from a profit of B3bn to a loss of B3bn for 2009.
TOP’s earnings have been cut by 82% and PTT has lost 30% in our new 2009 forecasts.
Banpu is our top pick; PTT downgraded to Sell
Banpu remains our top pick, albeit at a lower target price of B451/share (from B525). Banpu
is the only company under our Thai energy coverage with clear earnings growth potential for
2009F. PTT has been downgraded to Sell as the business outlook for its subsidiaries and
associates remains extremely poor, with a B22bn loss forecast for 4Q08. Refiners such as
PTTAR and TOP remain on our Sell list, as our US$2/bbl refining margin assumption would
suggest a significant drop in earnings for refiners. As we expect oil prices to continue
increasing, we maintain our Buy call on PTTCH: with higher oil prices, the gas-based
advantage should return. PTTEP remains profitable in these difficult times and we believe
the share price faces significant potential catalysts, hence it remains a Buy.

Contents
Estimates cut; PTT downgraded to Sell 3
Banpu remains our preferred choice in the sector. In year where profitability is likely
to be in question, we expect Banpu to deliver earnings growth of near 30%. We
downgrade PTT to Sell as the company’s outlook has turned very negative, in our
view.
3
Assuming a worst-case scenario 5
Commodity prices had a terrible run in 2008. Oil prices peaked in July 2008 and are
now down 72%. We slash our assumptions to reflect falling demand in the global
recession. In our worst-case scenario, we see Banpu as the most attractive
investment.
5
Oil prices have been unpredictable 5
Looking at consensus 6
Refining margins; assuming the worst 7
Our earlier assumption that FY09-10 refining margins would be at ‘mid-cycle’ levels
now seems too optimistic. Prospects for economic growth are deteriorating sharply.
Hence, our Indian O&G team has slashed its refining margin forecasts to US$2-
2.5/bbl for 2009-2010.
7
Petrochemical prices bottom 10
As petrochemical demand growth tracks economic growth, product prices have
fallen substantially over the past few months. Underlying energy prices are also no
longer high, and with the expected supply influx, the sector’s outlook is poor.
10
Coal: still our preferred way to play 17
While coal prices have fallen in line with oil prices, we still see coal as the safest
commodity in this market. But, we admit the global recession is hard to ignore.
Factoring in weakened demand, we lower our coal price by 21% for 2009F and 16%
for 2010F.
17
Earnings forecasts 18
We have made substantial changes to our earnings estimates across the board
(Table 9). The biggest are at PTTAR and TOP, which are impacted most by our
refinery margin estimates.
18
Maintain Banpu as top pick 21
We continue to dislike refiners… 22
… and downgrade PTT from Buy to Sell 22
Company profiles 23
Banpu Public Co 24
PTT Aromatics & Refining 33
PTT Chemical Pcl 43
PTT E&P 52
PTT Pcl 61
Thai Oil 69