RH Petrogas

UOBKayhian on 3 Mar 2014

FY14F PE (x): 48.8
FY15F PE (x): 23.4

Bottom line hampered by write-offs. RH Petrogas (RHP) reported 2013 net loss of
US$65.9m compared to a net profit of US$6.1m in 2012 due to major write-offs of
unsuccessful exploration and evaluation expenditure of US$44.2m and impairment loss
of goodwill of US$28.8m. However, its core net profit (after adjusting for one-offs and
impairments for comparison purposes) was better by 12.3% yoy. We believe that RHP is
being prudent to prepare for a better year in 2014, resulting in the major write-offs.
Maintain BUY with target price of S$1.40 based on NPV and risking model. Our
valuation is based on the NPV of the company’s current production/near-production
fields, plus risked estimates of its 2C resources and prospective resources, less net debt
adjusted for its committed capex.