DBS Group Research analysts Suvro Sarkar, Ho Pei Hwa, Patricia Yeung, Duladeth Bik, William Simadiputra and Elizabelle Pang have named several regional names as the ones to watch in the oil and gas space
Amid concerns over energy security, the analysts believe oil and gas will remain relevant still. At present, oil prices are remaining “on edge” due to new sanctions on Russian exports and potentially stricter sanctions on Iranian exports. This is despite the concerns over demand and the potential restoration of supplies by the Organization of the Petroleum Exporting Countries (Opec). At the same time, natural gas is also still attractive as the transition fuel and demand for liquefied natural gas (LNG) is expected to increase as Europe continues to move away from Russian gas.
With this in mind, the analysts are forecasting oil prices to remain rangebound around the US$70 ($94.52) to US$75 per barrel mark in 2025 despite a strong start to the year. However, the analysts say they could see increased volatility under US President Donald Trump’s time in office, as well as geopolitical risks.
Upstream oil and gas picks
Due to the potential upside risks to oil prices, the analysts have named China National Offshore Oil Corporation (CNOOC), PetroChina and PTT Exploration and Production Public Company Limited as their top picks in the upstream space. CNOOC is the largest producer of offshore crude oil and natural gas in China while PetroChina is the largest oil and gas producer and seller in China. It is also the listed arm of state-owned China National Petroleum Corporation. PTT Exploration and Production is a Thai national company that explores and produces petroleum in the country and around the globe.
DBS has “buy” calls for all three companies. CNOOC has a target price of HK$22 ($3.81). PetroChina has a target price of HK$6.90 while PTT Exploration and Production has a target price of THB169 ($6.76).
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Seatrium top pick among shipyards
Among the shipyards, the DBS team cited Seatrium as their top pick as the group could “continue to see strong inquiries”. In their Jan 27 report, the team notes that there is still robust newbuild demand for global production platforms, while demand for large wind turbine installation vessel (WTIV) is expected to surge.
DBS has a “buy” call on Seatrium and a target price of $3.
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Refinery seen as ‘safer’ bet among refinery and petrochemicals companies
The team named Thai-listed companies, Bangchak Corporation and Star Petroleum Refining PCL, as their top picks within refinery and petrochemicals companies as refining is deemed to be safer as downstream businesses in Thailand like marketing and oil retail are subject to regulatory risks. In 2025, the refinery and petrochemicals space could expect “softer crack spreads” on a y-o-y basis while the chemical sector should expect a “prolonged trough” ahead.
DBS has “buy” calls for Bangchak Corp and Star Petroleum Refining with target prices of THB43 and THB8.20 respectively.
Indonesia’s Alamtri Resources preferred for M&A potential
Indonesia’s Alamtri Resources, which recently spun off its coal business, was chosen among the Indonesian coal companies due to its potential for mergers and acquisitions (M&As) after its divestment.
The divestment of its coal arm will provide the company with more financing options for M&As, says analyst Simadiputra in a Jan 7 report. DBS has a “buy” call on Alamtri Resources with a target price of IDR2,800 (23 cents).
China gas
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Hong Kong-listed China Resources Gas and ENN Energy were named as top picks for the China gas sector.
The analysts see upside potential to gas sales volume growth, which was anticipated to grow by mid-single digits in 2025, due to stronger economic growth.
The sector is also seeing a dollar margin uptrend that is underpinned by lower gas procurement cost and cost pass through in residential segment. Furthermore, the sector could see earnings growth in the low teens with an increasing dividend payout ratio, which could offer a “decent” yield of 4% to 7% for FY2025.
China Resources Gas was preferred for its exposure to Tier 1 cities in China, which will benefit the most from stimulus packages. ENN Energy was selected for its potential earnings rebound in FY2025. DBS has given both companies “buy” calls with target prices of HK$38 for China Resources Gas and HK$74 for ENN Energy.
China power
The analysts see upside potential for growth estimates in power generation in 2025 due to stronger economic growth and capacity expansion. However, falling electricity tariffs remain the major risk, particularly for renewable units.
As such, analysts recommend investors expect less risk from electricity tariffs and curtailment rate for independent power producers (IPPs) with coal-fired units
China Resources Power was named as the top pick for stronger growth in power generation as well as its “attractive” yield of over 6%.
DBS has a “buy” call on the company with a target price of HK$22.
