PETRONAS recorded 4QFY23 core net profit of RM17.6bn, weaker by 20.2% QoQ and 19.0% YoY. This brings its full year FY23 core profit to RM80.4bn, dipping by 14.5% YoY from RM94.1bn in FY22. The weaker earnings are due to moderation in Brent crude oil prices at average of USD82.6/bbl in the year 2023, lower by 18.4% (USD101.3/bbl) in 2022. This has impacted all segmental earnings with the weakest from gas segment, dropping by 29.8% YoY, followed by upstream segment at -23.1% YoY. Despite the subdued performance, PETRONAS’ capital expenditure (capex) increased to RM52.8bn, higher by 5.3% on a YoY basis. The increase was led by domestic capex of RM26.2, higher by 41% YoY and exceeding annualised target of RM22.6bn (RM113bn for FY23-FY27). We expect PETRONAS’ annual domestic capex to remain intact on the back of stable Brent oil prices, supported by OPEC+ production cut extension and demand outlook revision. Hence, the prospect for our local oil and gas service equipment (OGSE) and offshore support vessel (OSV) remains positive for FY24F but potentially seasonally weaker in 1QFY24 due to the monsoon season. Although sentiment has improved slightly, we are still not overly bullish on Brent crude oil prices to be traded sustainably above USD90/bbl in 1H2024. We maintain our Neutral call on the sector.
Source: PublicInvest Research - 18 Mar 2024
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UZMACreated by PublicInvest | Nov 12, 2024