Brief Energy: PRM: Thai Largest Tanker Fleets Assured of Consistent Growth and more

In this briefing:

1. PRM: Thai Largest Tanker Fleets Assured of Consistent Growth
2. New J. Hutton Exploration Report (Week Ending 22/02/19)
3. MODEC: Add

1. PRM: Thai Largest Tanker Fleets Assured of Consistent Growth

We initiate coverage of PRM with a BUY rating, based on a target price of Bt7.70, derived from a PEG ratio of 0.9x, which is the average for the Asia ex-japan transportation sector, implying 22.0x PE’19E.

The story:

• Secured revenue from domestic trading business
• IMO 2020 implementation to propel floating storage demand
• Recovery in T/C rate should prompt international trading turnaround

Risks:  Lower-than-expected domestic oil consumption and trading activities in ASEAN, foreign currency and fuel cost fluctuations

2. New J. Hutton Exploration Report (Week Ending 22/02/19)

• Azumah Resources (AZM AU) rated a Speculative BUY
• 99.5m at 2.2g/t Au complements ‘discovery hole’ (75m above) – 93.1m at 2.3g/t Au
• DDHs from current programme targeting down-dip from existing intercepts
• Key drill results expected over next few weeks
• 1Moz Reserve, 2.5Moz Resource
• US$1,77M NPV_5%, 1.6yr payback.
• US$886/oz AISC (all-in sustaining cost)
• Azumah Resources (AZM AU) , Emmerson Resources (ERM AU), Xanadu Mines (XAM AU), Kingston Resources (KSN AU), Oklo Resources (OKU AU), Blackham Resources (BLK AU), Dacian Gold Ltd (DCN AU), De Grey Mining (DEG AU), Austar Gold (AUL AU), Strategic Minerals PLC (SML LN), Asiamet Resources Ltd (ARS LN), Landore Resources Ltd (LND LN)

3. MODEC: Add

Towards the end of 2018 Modec Inc (6269 JP)‘s share price dropped 46.5% as the price of crude oil also cratered, falling 44.4% . Since that plunge, the stock price has rebounded 53.9% as the company posted excellent results at 4Q and guidance, while conservative, was for continued healthy earnings.

Having visited the company today, we believe earnings should continue to be strong and actually strengthen over the next few years with MODEC likely to start running into capacity constraints over the course of this year.