PTT - Credit Suisse

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08 September 2014

Asia Pacific/Thailand

Equity Research

Integrated Oil & Gas

PTT

(PTT.BK / PTT TB) INCREASE TARGET PRICE

Entering the second phase of the reform

■ Focus on NGV price increase. Investors remain sceptical on prospects for

energy price reform which is perceived to be complex and politically driven.

We argue that our positive view simply relies on potential NGV (natural gas

vehicle) price increase; the government has already agreed in principle that

retail price should be raised to reflect its cost. The question remains only on

the timing of the policy implementation, in our view.

■ Market overly concerned about downside from the reform. We see

limited risk that the Central Administrative Court would ask PTT to return the

offshore pipeline as the court earlier confirmed that PTT had complied with

the ruling. Competition from the introduction of Third Party Access (TPA) is

not expected to materialise until after 2022. Negative impacts of the

potentially higher costs of LPG feedstock at PTTGC could be more than

offset by the benefits at PTT's Gas Separation Plants, which are likely to be

allowed to raise selling price to US$550/t from US$330/t currently.

■ Expect more clarity towards year end. We expect the implementation of the

NGV price increase to start by the end of the year with prices to be raised

gradually by Bt0.5/kg per month from Bt10.5/kg over ten months. Our earnings

forecast are yet to include any possible upside from NGV or LPG—this could

add 16% and 6%, respectively, to our full-year FY16 net profit forecast.

■ Raising TP to Bt388 by factoring in 25% probability of NGV and LPG

price increase. At 10x historical average P/E, the increase in NGV and LPG

prices would raise our NAV by Bt60/share and Bt21/share, respectively. We

factor in a 25% chance of policy implementation and raise our TP to Bt388

(from Bt368).

Share price performance

60

80

100

120

260

310

360

Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14

Price (LHS) Rebased Rel (RHS)

The price relative chart measures performance against the

THAILAND SET IDX which closed at 1584.32 on 05/09/14

On 05/09/14 the spot exchange rate was Bt32.08/US$1

Performance Over 1M 3M 12M Absolute (%) 1.8 11.1 — Relative (%) -2.2 2.4 -20.6

Financial and valuation metrics

Year 12/13A 12/14E 12/15E 12/16E Revenue (Bt mn) 2,842,688.0 3,068,671.1 3,071,550.8 2,958,282.3 EBITDAX (Bt mn) 237,543.8 293,137.6 301,367.8 294,015.6 EBIT (Bt mn) 155,878.0 186,347.5 186,315.4 173,282.3 Net profit (Bt mn) 94,652.3 103,102.3 107,028.7 106,416.5 EPS (CS adj.) (Bt) 33.14 36.10 37.47 37.26 Change from previous EPS (%) n.a. -0.4 1.1 0.3 Consensus EPS (Bt) n.a. 35.5 37.3 37.6 EPS growth (%) -9.5 8.9 3.8 -0.6 P/E (x) 10.0 9.2 8.8 8.9 Dividend yield (%) 3.9 3.8 4.0 3.9 EV/EBITDAX (x) 5.3 4.2 3.8 3.6 P/B (x) 1.4 1.3 1.2 1.1 ROE (%) 14.7 14.4 13.7 12.5 Net debt/equity (%) 39.2 28.8 19.3 10.8

Source: Company data, Thomson Reuters, Credit Suisse estimates.

Rating OUTPERFORM Price (05 Sep 14, Bt) 331.00 Target price (Bt) (from 368.00) 388.00¹ Upside/downside (%) 17.2 Mkt cap (Bt mn) 945,435 (US$ 29,471) Enterprise value (Bt mn) 1,218,320 Number of shares (mn) 2,856.30 Free float (%) 34.0 52-week price range 342.0 - 264.0 ADTO - 6M (US$ mn) 33.4

*Stock ratings are relative to the coverage universe in each

analyst's or each team's respective sector.

¹Target price is for 12 months.

Research Analysts

Paworamon (Poom) Suvarnatemee, CFA

66 2 614 6210

[email protected]

Wattana Punyawattanakul

66 2 614 6215

[email protected]

08 September 2014

PTT

(PTT.BK / PTT TB) 2

Focus chart and tables Figure 1: Retail transport fuel prices in heat equivalence unit in comparison with

unleaded gasoline 95

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

Unleaded gasoline 95 Gasohol E10 95 Diesel LPG NGV

Bt/litre

*Prices as of 29 August 2014, Source: ERS, EPPO

Figure 2: Estimated impact of higher NGV price

Taxi & EPS NAV

Trucks & public impact impact

Private car buses Total (Bt) @ 10x PER (Bt)

Demand breakdown 80% 20% 100%

Volume (tonne/day) 7,096 1,774 8,870

After-tax earnings impact (Bt mn)

Every Bt50/kg increase 1,036 259 1,295 0.5 5

Price increase to match cost of Bt16.6/kg 12,639 4,196 16,835 5.9 59

Source: Company data, Credit Suisse estimates

Figure 3: Estimated impact on PTT from possible change in LPG policy

Volume PTT sold at capped price of US$330/t 1.8 Mn t

Estimated costs 550 US$/t

Cap price 330 US$/t

Price difference 220 US$/t

Increased in profit after tax 10,106 Bt mn

Lower profit of affiliates

PTTGC (2,470) Bt mn

Others (HMC, PTT Asahi) (1,715) Bt mn

Net impact to PTT's consolidated profit 5,921 Bt mn

Net EPS impact 2.1 Bt

PTT's share price upside (at PER 10x) 21 Bt/share


Retail price of NGV is less

than half of diesel price

NGV price increase to add

16% of profit in FY16 and

add Bt160/share to NAV

If LPG prices are raised as

we expect, PTT's profit

could rise by 6% and add

Bt21/share to NAV

08 September 2014

PTT

(PTT.BK / PTT TB) 3

Policy direction is clear First phase of the reform has started

Reform actions have been made (Figure 4). According to the Permanent Secretary of the

Energy Ministry, the National Committee for Peace and Order (NCPO) has already agreed

in principle that energy prices should move to reflect market prices and subsidies should

be cut. Steps have already been taken to: (1) reform energy prices to reduce subsidies

and (2) restructure PTT.

The biggest concern is resistance from public, especially energy activist groups. Efforts

have been made to reduce resistance and seek legal actions against the distribution of

wrong or misleading information to create opposition against PTT and the Energy Ministry

on issues related to the energy sector.

NCPO's concerns about public resistance reflect in recent policy decision to: (1) seek co-

operation from E&P companies to stop exporting crude (5% of total production mostly

done by Chevron (CVX.N, US$126.8, O, TP US$150.00)) as activists question the move

to export despite Thailand being a net importer of crude and (2) keep the cap on diesel

price at Bt30/share despite attempts to reduce cross subsidies between diesel and

gasoline users.

Second phase: Focus on LPG and NGV price reform

The most critical decision of the government in this phase (now to be carried out by the

recently appointed Energy Minister Dr Narongchai Akrasanee) is the reduction of

subsidies for LPG and NGV. Big decision on LPG is on the controversial issue of PTTGC,

49%-owned by PTT, which is paying less for LPG compared to other types of users. For

NGV, the decision should be easier and more straightforward. However, the increase of

NGV price would benefit PTT which is now being attacked by activists on issues of gas

pipeline and LPG.

At the end, some kind of compromised exit may be needed, allowing activists their way on

some issues. We feel that the most vulnerable issue for PTT is the price that PTTGC is

paying for LPG feedstock while PTT has a stronger case on its ownership of offshore gas

pipeline and NGV price increase.

The process has started

Resistance from activist

groups is the biggest

concern

Only easier policies have

been pursued so far

A more difficult decision to

be made on LPG

A compromise may be

needed to move forward

08 September 2014

PTT

(PTT.BK / PTT TB) 4

Figure 4: Key reform events

Potential impact

Dates Issues Notes on PTT

22-May-14 NCPO staged the coup

16-Jun-14 PTT restructuring Chairman of the Board and others board members resigned Positive

4-Jul-14 PTT restructuring New Chairman and directors appointed Positive

15-Aug-14 PTT restructuring First National Energy Policy Committee (NEPC) meeting

approving tax waiver for pipeline transfer and PTT's plan to

IPO a refinery, SPRC

Positive

Pipeline Public hearing on Third Party Access (TPA) of gas pipeline Neutral

27-Aug-14 Price reform First public debate between PTT and NGOs Mixed

29-Aug-14 Price reform Raise price of diesel and reduce prices of gasoline by

changes in tax and oil fund collections

Neutral

29-Aug-14 Gen Prayuth asked E&P companies to stop exporting crude oil

(5% of Thailand's production)

Neutral

CS's forecast of upcoming events

4Q14 Price reform Further cuts in gasoline tax (now Bt4.5-5.6/litre, target

Bt3/litre)

Neutral

Increase in diesel prices by raising excise tax from Bt0.75/litre

now to Bt3/litre

Neutral

Raise LPG price for auto sector to be equal to cooking market

by raising oil fund collection

Neutral

Raising NGV price from Bt10.5/kg to cost of Bt16/kg Positive

Pipeline Clarification of PTT's gas pipeline transfer to MoF from

Council of State

Positive

1Q15 Price reform Restructure LPG prices to all types of producers Positive to PTT/Negative to PTTGC

Pipeline Clarification from Constitutional court on PTT's pipeline

transfer to MoF

Positive

Pipeline Conclusion of restructuring of gas price: Gulf Gas and Pool

Gas

Neutral/potential negative

Pipeline TPA becomes effective Neutral

Remaining of 2015 PTT restructuring Listing of SPRC, sell of BCP Positive

Pipeline Completion of pipeline separation into a 100%-owned entity Neutral


08 September 2014

PTT

(PTT.BK / PTT TB) 5

Upcoming events: Focus on NGV NGV—not a part of a conflict

Our positive view on PTT hinges on the potential for NGV price hike as PTT is currently

losing around Bt21 bn a year on NGV. NCPO has agreed in principle that NGV price has

to be raised to reflect costs. The remaining question is the timing and pace of

implementation. We see a strong case for PTT to benefit from NGV price increase (Please

see PTT: It can only get better, dated 27 June 2014 and Thailand Energy Sector: Energy

reform: A chance to make it better, dated 27 June 2014).

In the first public debate between activists and PTT on 27 August, the pricing of NGV was

not discussed, which we see as a positive. This supports our view that the increase in

NGV price should face less resistance.

Figure 5: Retail transport fuel prices in heat equivalence unit vs unleaded gasoline 95

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

Unleaded gasoline 95 Gasohol E10 95 Diesel LPG NGV

Bt/litre

*Prices as of 29 August 2014, Source: ERS, EPPO

Price of NGV is capped at Bt10.5/kg at gas stations, equating to only 30% of cost of

gasoline and half of diesel and at a deep discount to PTT's cost of Bt16/kg. PTT lost Bt21

bn in 2013 from NGV. Given that the cost of subsidy burden is borne only by PTT,

historically the government has had no incentive to liberalise the price. This ends up

creating huge economic loss for the country as marginal supply of gas is from expensive

LNG imports.

Subsidies to be reduced

Not a target of NGOs

Retail price of NGV is less

than half of diesel price

PTT lost Bt21 bn from NGV

in 2013

https://plus.credit-suisse.com/r/wCYBVm

https://plus.credit-suisse.com/r/yaH4nt

https://plus.credit-suisse.com/r/yaH4nt

08 September 2014

PTT

(PTT.BK / PTT TB) 6

Figure 6: PTT's growing NGV loss, driven by both volume

growth and higher loss per unit as gas costs rose

Figure 7: Retail price capped at Bt10.5/kg, only enough to

cover gas costs

0

1

2

3

4

5

6

7

8

9

-25

-20

-15

-10

-5

0

2010

2011

2012

2013

2014

E

2015

E

2016

E

Bt/kgBt bn

NGV loss (Bt bn, LHS) NGV loss (Bt/kg, RHS)

Gas cost10.4

Distribution cost5.6

0

2

4

6

8

10

12

14

16

NGV's cost

Bt/kg

Retail price @ Bt10.50/kg

Source: Company data, Credit Suisse estimates *Gas cost includes 92 satang of pipeline tariffs and supply charges.

Source: EPPO, Credit Suisse estimates

According to PTT, around 50% of NGV users are trucks while 30% are private cars and

20% public vehicles (taxis and buses). The system to provide discount to taxi drivers has

already been in place since 2012 when retail price was raised from Bt8.5/kg to Bt10.5/kg.

Taxi drivers have recently asked the government to continue to subsidise them through

the same system or give permission to raise taxi fare. Truck operators have also agreed to

the price increase but have requested for more extended network of NGV stations.

Figure 8: NGV vehicles accounted for 1% of number of cars registered

# of NGV vehicles % of vehicles % of consumptions

Trucks 43,481 11% 50%

Bus 28,961 7% 20%

Taxi 79,408 20%

Private cars 251,115 62% 30%

Total 402,965

Source: Department of Land Transportation

According to PTT, NGV is available in 22 provinces in Thailand. To extend to the

remaining 77 provinces, PTT needs to invest in distribution network and pipeline. PTT

plans to communicate to the public that it is prepared to expand the network if retail price

of NGV is raised to compensate its costs.

Could add Bt60/share to NAV if loss eliminated

The final decisions on these key issues are expected to be made by NEPC chaired by PM

General Prayuth. We reaffirm our view that there is a strong case to raise cap price from

Bt10.5/kg as NGV is not widely used and is not the issue of conflicts with activists. If the

loss from NGV is eliminated, we estimate PTT's SOTP to improve by Bt60/share based on

a P/E of 10x (historical average).

Relatively easy to do

Limited numbers of users

PTT plans to communicate

to public to expand network

if compensated for costs

Final decision lies with the

PM

08 September 2014

PTT

(PTT.BK / PTT TB) 7

Downside not as much as perceived On the issue of LPG, the market is concerned about the potential rise in LPG feedstock

cost for PTTGC, a 49% petrochemical affiliate of PTT. We are more positive on the issue.

We believe the decision to force PTTGC to pay more for LPG will come together with the

decision to raise LPG price at PTT's Gas Separation Plants (GSP). However, the issue of

LPG is complicated and we expect the government to take longer to make a decision.

LPG: Bad for PTTGC, but may not be bad for PTT

The issue: PTT group has been under pressure by activists as the cost of LPG used by

PTTGC is lower than that for other types of users and SCC. LPG prices in Thailand are

subsidised by PTT (sells at GSP below its cost), refineries (sell at prices below

international prices), and Oil Fund (subsidises losses from import). Around 35% of LPG

demand is used as petrochemical feedstock by both Siam Cement (0.7 mn t) and PTTGC

(0.75 mn t). PTT argues that PTTGC, 49%-owned by PTT, is buying LPG cheaper than

SCC (US$590/t vs US$930/t) because SCC's contract has been made only recently and

it's not a firm commitment, unlike PTTGC's net-back-pricing contracts, which have been in

place since 1988 when the petrochemical industry was set up.

Figure 9: Retail LPG price structure among different types of users

(Bt/kg) Cooking Petrochem* Transportation Industry

Demand breakdown 32% 35% 24% 8%

Ex-refinery price 10.9 22.3 10.9 10.7

Tax 2.4 0.0 2.4 2.4

Oil fund 1 0.4 1.0 0.4 0.6

VAT 1.0 1.6 1.0 1.0

Wholesale prices 14.6 - 14.6 14.6

Oil fund 2 4.2 - 3.0 10.5

Marketing margins 3.3 - 3.3 3.3

VAT 0.5 - 0.4 1.0

Retail price 22.6 24.9 21.4 29.3

Retail price (US$/t) 705 777 666 914

*Petrochem users are split into two groups. Average price sold to PTT's affiliates is US$592/t (before oil

funds and VAT) vs US$930/t sold to SCC group. Source: EPPO, Credit Suisse estimates

Figure 10: LPG demand and prices paid by each group Figure 11: LPG supply and pricing estimates

-

100

200

300

400

500

600

700

800

900

1,000

US$/t

PTTGC0.9 mnt

Transport1.8 mnt

Cooking2.4 mnt

Petchem0.9 mnt

Industrial0.6 mnt

0

100

200

300

400

500

600

700

800

900

1000

US$/t

GSP (Cooking)1.8 mnt

GSP (chem)0.9 mnt

Refinery1.9 mnt

Import1.9 mnt

Source: NEPO, Company data, Credit Suisse estimates Source: NEPO, Company data, Credit Suisse estimates

LPG prices in Thailand differ

for different types of users.

LPG supply comes from

PTT's Gas Separation

Plants, refineries and

import. Government is

subsidising import losses

Focus in on LPG used as

petrochemical feedstock

08 September 2014

PTT

(PTT.BK / PTT TB) 8

Risk: PTTGC may use LPG feedstock at higher cost

We believe that the issue will not be settled as long as the government's Oil Fund

continues to subsidise the import bill, and the prices paid by the public and petrochemical

users remain different. We believe it is fair to all parties to pay international prices and let

market prices dictate demand.

Any downside on LPG issue to PTT Group is likely to affect PTTGC more. PTT should be

compensated by higher cap price at its GSP as the return on GSP is likely to be regulated.

PTT is selling 1.8 mn t of its LPG and propane output at government capped price of

US$330/t, effectively losing Bt11 bn a year compared to its estimated cost of US$550/t. If

price at GSP is raised from US$330/t to US$550/t, our NAV for PTT would go up by

Bt21/share (Figure 12).


Volume PTT sold at capped price of US$330/t 1.8 mnt


Cap price 330 US$/t




PTTGC (2,470) Bt mn






For PTTGC, we estimate earnings impact of Bt5 bn in the worst case that LPG cost is

raised to international price, implying a floor price of Bt55/share. We maintain our

NEUTRAL rating on PTTGC with TP of Bt65, weighing in a 50% probability of LPG prices

moved to international price (Figure 13).

Figure 13: Estimated impact on PTTGC if cost of LPG is raised

LPG purchased from GSP (in 2013) 0.75 mnt

PTTGC's cost from GSP* 592 US$/t

Oil fund tax 33 US$/t

PTTGC's total cost 625 US$/t

International price 888 US$/t

Price difference (263) US$/t

After tax earnings impacts (5,104) Bt mn

EPS impacts -1.1 Bt/share

% of 2015 profit -16%

Share price impacts (at PER 10x) -11.3 Bt/share


LPG feedstock cost most

controversial issue among

all conflicts with NGOs

PTT is expected to be

compensated by higher

selling price at GSP

If price at GSP is raised

from US$330/t to US$550/t,

our NAV for PTT would go

up by Bt21/share

PTTGC is at the losing end

Expect PTTGC's profit to be

hurt by Bt5.1 bn a year or

16% of FY15 profit

08 September 2014

PTT

(PTT.BK / PTT TB) 9

Gas pipeline—limited risk Pipeline ownership—clear arguments from PTT side

Activists are claiming that PTT has not transferred all pipeline assets (particularly the

offshore pipeline) to MoF as per order of the Central Administrative Court by citing letters

of the Office of the Auditor General of Thailand (OAG) saying that the transfer is not yet

completed. In 2007, the court ordered PTT to return to MoF portions of its onshore pipeline

which are built on land expropriated from public by using state power. The ruling by the

Central Administrative Court is final and there is no higher court for an appeal. In 2008,

PTT transferred 456 km of onshore pipeline built on expropriated land to MoF.

The court verdict doesn't specifically mention the status of the offshore pipeline but ruled

that the pipeline to be returned to MoF is the section built on expropriated land and funded

by government's budget.

PTT has defended that the transfer of pipeline is completed. The pipeline transfer was

conducted in 2008 under the review of the committee set up by the Treasury Department

(under the MoF) and consisted of representatives from the Council of State and the

Department of Lands (under the Interior Ministry). The court confirmed in December 2008

that the transfer was completed as per the ruling. PTT has also referred to confirmations

from the court and acknowledgement of the PM Abhisit-led cabinet in 2010 that the

transfer of gas pipeline has been completed. (Figure 14)

PTT is confident in its case and has recently filed the petition to the court seeking

clarification on the issue. MoF is also seeking confirmation from the Council of State which

was also in the committee reviewing the process of pipeline transfer from PTT to the MoF

during 2008. The Council of State would seek an agreement with the OAG in order to seek

an end to the issue. As a state-owned-enterprise, PTT has its financial statement audited

by OAG, but the auditor has never made any comment on its reports filed to the SET

(Stock Exchange of Thailand).

Figure 14: Key events related to PTT's gas pipeline after the court's ruling on 14 Dec

2007

Date Events

26-Dec-07 MoF set up a committee to oversee pipeline transfer consisted of representatives from

related ministries and the Council of State

22-Dec-08 MoF informed PTT that the asset transfer is completed

25-Dec-08 PTT reported to the court the completion of asset transfer to comply with the ruling

26-Dec-08 Central Administrative Court confirmed that all related parties have complied with the ruling

5-Jan-09 PTT received a report from AOC saying that the transfer is incomplete

21-Jan-09 PTT informed AOC of Court's confirmation on 26 December 2008

20-Feb-09 AOC sent another letter saying that the transfer is incomplete but court's decision would be

considered final

3-Mar-09 Court rejected the petition of NGOs and confirmed that the transfer is completed according

to the verdict

Court informed AOC that PTT already complied by court verdict

10-Aug-10 PM Abhisit cabinet acknowledged the completion of the transfer

15-Oct-12 Foundation for Consumers filed the case to court that PTT didn't not return offshore pipeline

2-Nov-12 Court rejected the case

Source: Company data

Activists want offshore

pipeline to be returned to

MoF

PTT has confirmation from

court regarding completion

of pipeline transfer

PTT and MoF are seeking

final clarification from court

and the Council of State

PTT is now seeking

clarification from the Central

Administrative Court

08 September 2014

PTT

(PTT.BK / PTT TB) 10

MoF to buy 25% stake in pipeline after separation?

PTT has set a target to complete the separation of gas pipeline and transfer it to a new

100%-owned company by mid-2015 as approved by NEPC in order to improve

transparency for regulators and allow for Third Party Access (TPA). (In its listing

prospectus in 2001, PTT is required to legally separate the transmission pipeline system

within one year of the offer being listed on SET but this has been delayed.)

NEPC has agreed MoF would have an option to buy a 25% stake in the pipeline. We do

not see this as a risk as the MoF's purchase of the pipeline will need shareholders’

approval. MoF will not have the rights to vote given that it is a related transaction, leaving

the decision to veto the transaction by minority shareholders in the market. As such, we

believe the pricing of the transaction will be fair to minority shareholders of PTT.

We do not believe MOF will spend over US$2 bn to buy a 25% stake in the pipeline where

it already has indirect majority control through its 66% stake in PTT (51% by MOF and

15% by Vayupak Fund). To ensure fairness for public, the government can always tightly

regulate the return of pipeline through the regulator, Energy Regulatory Commission

(ERC), without having to commit state budget to buy the pipeline.

Risks of open access to break up monopoly

PTT is the sole operator and owner of the gas pipeline network where tariff rates are

regulated by the ERC. TPA (recently completed public hearing) is set to be in effect by

March 2015. Even after the TPA becomes effective, we do not expect any impact on PTT

as gas demand and supply are fully contracted until 2022. TPA would only apply to new

gas supply (LNG, new gas fields) or new gas demand (IPPs which start after 2022).

Expect changes to Gulf gas and Pool gas structure

Natural gas price structure (Gulf Gas vs Pool Gas) will come under review in order to allow

fair competition for potential new gas suppliers. (Otherwise, PTT will have advantage over

new suppliers with its access to cheaper gas in the Gulf of Thailand). Difference in quality of

gas is also an issue driving the restructuring of the gas pool. This does not necessarily mean

that the pricing structure of gas supplied to the Gas Separation Plants would be changed.

Figure 15: Thailand's gas price structure

*Gas price in the Gulf of Thailand is formula-based and linked to fuel oil price, exchange rate, producer

price index in Thailand, and Oil Gas & Machinery price index in USA, Source: EPPO

Pipeline separation should

improve transparency and

allow for TPA

Shareholders will be able to

vote to block the deal if offer

price is too low

We do not believe MoF will

buy a 25% stake

Third Party Access (TPA)

unlikely to have any impact

in the next eight years

Gas price supplied to

petrochemical plants is

unlikely to get affected

08 September 2014

PTT


Raising TP to Bt388 Factoring in 25% chance of higher NGV and LPG price

We raised our TP from Bt368 to Bt388 by adding Bt20 to our target price assuming a 25%

probability that price of NGV and LPG will be raised with benefits going to PTT. Based on

a P/E of 10x (historical average), profit enhancement from higher NGV price would add

Bt60/share and higher LPG price at its GSPs would add another Bt21/share.

Figure 16: Estimated impact of higher NGV price

Taxi & EPS NAV

Trucks & public impact impact

Private car buses Total (Bt) @ 10x PER (Bt)

Demand breakdown 80% 20% 100%

Volume (tonne/day) 7,096 1,774 8,870

After-tax earnings impact (Bt mn)

Every Bt50/kg increase 1,036 259 1,295 0.5 5

Price increase to match cost of Bt16.6/kg 12,639 4,196 16,835 5.9 59



Volume PTT sold at capped price of US$330/t 1.8 mn t


Cap price 330 US$/t




PTTGC (2,470) Bt mn






Earnings upside of 16% and 6% from NGV and LPG

Our earnings forecast do not include potential benefits in case the price increase for both

NGV and LPG but conservatively assumes a 10% cut in pipeline tariffs in 2015 though we

believe the chance of a cut is low.

We expect NGV and LPG prices to move up gradually with benefits from NGV price

increase likely to come sooner than LPG's. The gradual price increase is expected to be

implemented in 2015 over the period of 10 months with full year benefits to be seen in

2016. We estimate annual increase in net profit of Bt16.8 bn from NGV price increase and

Bt5.9 bn from LPG price increase if all losses are eliminated. The impacts are the increase

of 16% and 6% in FY16 profit for NGV and LPG, respectively.

NGV price increase would

add 16% to profit in FY16

and Bt160/share to NAV

If LPG prices are raised as

we expect, PTT's profit

would rise by 6% and add

Bt21/share to NAV

Our earnings forecast is

conservative and assumes

cut in pipeline tariffs

Full-year benefits of 16%

and 6% for NGV and LPG,

respectively, in FY16

08 September 2014

PTT


Figure 18: PTT's SOTP valuation

Bt/sh TP Value to PTT Current share price Value to PTT

PTTEP 199 181 165 150

PTTGC 65 50 65 50

IRPC 4 9 4 9

TOP 64 22 52 18

BCP 35 4 35 4

Value of listed entities 266 231

Non-listed downstream* 13 13

Gas business 147 147

Coal & Oil 49 49

Total EV 476 441

Net debt (81) (81)

Equity value 395 360

After 10% holding company discount** 368 337

Higher NGV price 59 59

Higher LPG price 21 21

SOTP if policies fully implemented 448 417

SOTP if 25% chance of policy implementation 388 357

Source: Credit Suisse estimates

Figure 19: Historical P/E band Figure 20: Foreign ownership

100

150

200

250

300

350

400

Dec

-04

Jun-

05

Dec

-05

Jun-

06

Dec

-06

Jun-

07

Dec

-07

Jun-

08

Dec

-08

Jun-

09

Dec

-09

Jun-

10

Dec

-10

Jun-

11

Dec

-11

Jun-

12

Dec

-12

Jun-

13

Dec

-13

Jun-

14

Dec

-14

Jun-

15

Dec

-15

Bt/share

PTT (Bt/sh) 8.0x 9.0x 10.0x 11.0x

16

17

18

19

20

21

22

23

24

Jan-

05

Sep

-05

May

-06

Jan-

07

Sep

-07

May

-08

Jan-

09

Sep

-09

May

-10

Jan-

11

Sep

-11

May

-12

Jan-

13

Sep

-13

May

-14

(%)

Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates

08 September 2014

PTT


PTT Public Company Limited PTT.BK / PTT TB Price (05 Sep 14): Bt331.00, Rating: OUTPERFORM, Target Price: Bt388.00, Analyst: Paworamon (Poom) Suvarnatemee

Target price scenario

Scenario TP %Up/Dwn Assumptions

Upside 370.00 11.78 Higher-than-expected oil price

Central Case 388.00 17.22 SOTP valuation based on our TP for all listed affiliates and subsidiaries

Downside 255.00 (22.96) Affiliates correct to three-years low

Key earnings drivers 12/13A 12/14E 12/15E 12/16E

Dubai crude price (USD/bbl)

105.5 104.2 100.5 92.5 Gas demand growth (%) 0.95 (0.50) 4.00 5.00 HDPE price (USD/t) 1,369 1,416 1,417 1,418 Avg. Bt/USD 30.7 32.6 32.5 32.5 — — — —

Income statement (Bt mn) 12/13A 12/14E 12/15E 12/16E

Sales revenue 2,842,688 3,068,671 3,071,551 2,958,282 Cost of goods sold 2,618,298 2,809,485 2,806,369 2,705,729 SG&A 49,874 51,936 54,510 56,146 Other operating exp./(inc.) (63,027) (85,888) (90,696) (97,608) EBITDAX 237,544 293,138 301,368 294,016 Exploration expense 5,351 6,004 6,279 6,593 EBITDA 232,193 287,134 295,089 287,423 Depreciation & amortisation 76,315 100,786 108,773 114,140 EBIT 155,878 186,347 186,315 173,282 Net interest expense/(inc.) 20,394 22,009 20,839 19,093 Associates/JV — — — — Forex losses (gains) — — — — Non-operating inc./(exp.) (49) (1,625) — — Recurring PBT 135,434 162,713 165,477 154,190 Exceptionals/extraordinaries — — — — Taxes 47,692 57,763 58,744 53,966 Profit after tax 87,742 104,950 106,733 100,223 Other after tax income 27,383 21,692 26,677 29,895 Minority interests 20,473 23,540 26,380 23,702 Preferred dividends — — — — Reported net profit 94,652 103,102 107,029 106,417 Analyst adjustments — — — — Net profit (Credit Suisse) 94,652 103,102 107,029 106,417

Cash flow (Bt mn) 12/13A 12/14E 12/15E 12/16E

EBIT 155,878 186,347 186,315 173,282 Net interest (20,394) (22,009) (20,839) (19,093) Tax paid (47,692) (57,763) (58,744) (53,966) Working capital 11,840 5,730 3,575 2,514 Other cash & non-cash items 76,570 99,161 108,773 114,140 Operating cash flow 176,201 211,466 219,081 216,878 Capex (183,011) (130,013) (118,231) (108,886) Free cash flow to the firm 7,215 89,577 107,357 115,994 Disposals of fixed assets — — — — Acquisitions — — — — Divestments — — — — Associate investments — — — — Other investment/(outflows) — — — — Investing cash flow (168,986) (121,889) (111,724) (100,884) Equity raised 28,578 — — — Dividends paid (46,368) (39,988) (36,086) (37,460) Net borrowings 27,622 (20,280) (30,000) (45,000) Other financing cash flow — — — — Financing cash flow 9,833 (60,268) (66,086) (82,460) Total cash flow 17,047 29,309 41,271 33,534 Adjustments — — — — Net change in cash 17,047 29,309 41,271 33,534

Balance sheet (Bt mn) 12/13A 12/14E 12/15E 12/16E

Cash & cash equivalents 160,370 189,679 230,950 264,484 Current receivables 311,063 335,788 336,104 323,714 Inventories 28,798 30,967 30,936 29,833 Other current assets 22,912 24,280 25,094 25,642 Current assets 523,144 580,713 623,085 643,672 Property, plant & equip. 740,649 812,619 828,206 829,336 Investments 271,275 284,844 305,013 326,905 Intangibles 176,749 171,710 166,271 160,564 Other non-current assets 89,905 89,443 89,058 88,742 Total assets 1,801,722 1,939,330 2,011,632 2,049,219 Accounts payable 303,807 326,688 326,358 314,717 Short-term debt 60,280 50,000 50,000 50,000 Current provisions — — — — Other current liabilities 42,320 49,540 50,509 47,520 Current liabilities 406,408 426,228 426,867 412,237 Long-term debt 422,563 412,563 382,563 337,563 Non-current provisions — — — — Other non-current liab. 149,572 153,706 158,047 162,605 Total liabilities 978,543 992,498 967,477 912,405 Shareholders' equity 682,647 745,761 816,704 885,660 Minority interests 140,532 201,071 227,452 251,154 Total liabilities & equity 1,801,722 1,939,330 2,011,632 2,049,219

Per share data 12/13A 12/14E 12/15E 12/16E

Shares (wtd avg.) (mn) 2,856 2,856 2,856 2,856 EPS (Credit Suisse) (Bt) 33.1 36.1 37.5 37.3 DPS (Bt) 13.0 12.6 13.1 13.0 BVPS (Bt) 239 261 286 310 Operating CFPS (Bt) 61.7 74.0 76.7 75.9

Key ratios and valuation 12/13A 12/14E 12/15E 12/16E

Growth(%) Sales revenue 1.75 7.95 0.09 (3.69) EBIT (7.1) 19.5 (0.0) (7.0) Net profit (9.5) 8.9 3.8 (0.6) EPS (9.5) 8.9 3.8 (0.6) Margins (%) EBITDAX 8.4 9.6 9.8 9.9 EBITDA 8.2 9.4 9.6 9.7 EBIT 5.48 6.07 6.07 5.86 Pre-tax profit 4.76 5.30 5.39 5.21 Net profit 3.33 3.36 3.48 3.60 Valuation metrics (x) P/E 10.0 9.2 8.8 8.9 P/B 1.38 1.27 1.16 1.07 Dividend yield (%) 3.93 3.82 3.96 3.94 P/CF 5.37 4.47 4.32 4.36 EV/sales 0.45 0.40 0.37 0.36 EV/EBITDAX 5.34 4.16 3.81 3.63 EV/EBITDA 5.46 4.24 3.89 3.72 EV/EBIT 8.13 6.54 6.16 6.17 ROE analysis (%) ROE 14.7 14.4 13.7 12.5 ROIC 9.2 10.2 9.7 9.0 Asset turnover (x) 1.58 1.58 1.53 1.44 Interest burden (x) 0.87 0.87 0.89 0.89 Tax burden (x) 0.65 0.64 0.64 0.65 Financial leverage (x) 2.19 2.05 1.93 1.80 Credit ratios Net debt/equity (%) 39.2 28.8 19.3 10.8 Net debt/EBITDA (x) 1.39 0.95 0.68 0.43 Interest cover (x) 7.6 8.5 8.9 9.1

Source: Company data, Thomson Reuters, Credit Suisse estimates.

0

2

4

6

8

10

12

2009 2010 2011 2012 2013 2014

12MF P/E multiple

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00

2009 2010 2011 2012 2013 2014

12MF P/B multiple

Source: IBES

08 S

ep

tem

ber 2

01

4

PT

T

(PT

T.B

K / P

TT

TB

) 1

4

Figure 21: Share price performance

Latest price Share price performance Rel. price performance

(lccy) 1W 1M 3M 6M 12M 1W 1M 3M 6M 12M

PetroChina 11.6 5.6 14.8 24.0 43.5 33.6 2.7 11.5 11.7 29.8 20.4

China Petroleum & Chemical Corporation 8.1 3.6 8.7 14.0 15.3 37.0 0.6 5.3 1.7 1.6 23.9

Reliance Industries 1,024 2.5 3.7 -8.6 17.8 18.9 1.2 -1.5 -14.8 -5.2 -23.3

PTT 331 3.1 1.8 11.1 13.4 0.0 1.8 -2.1 2.5 -3.4 -20.5

Gazprom 138.2 4.7 10.8 -4.0 11.4 -1.3 0.0 3.5 4.3 3.9 5.7

Rosneft 236.5 4.7 7.7 -0.2 0.2 -8.9 0.0 0.4 8.2 -7.3 -1.9

Surgutneftegas 26.8 4.9 6.6 -1.3 -0.7 -1.7 0.2 -0.7 7.0 -8.2 5.3

Petrobras 19.3 -1.2 16.5 31.0 77.3 32.8 -0.9 12.5 28.5 71.0 12.1

Sasol Limited 637.1 3.0 5.8 4.6 9.5 30.9 1.2 4.2 0.7 0.8 9.6

BG Group plc 1,233 2.6 3.7 -1.4 13.1 -3.7 1.9 0.1 -1.3 11.8 -9.1

BP 455 -5.5 -3.9 -9.9 -5.2 2.1 -6.2 -7.6 -9.8 -6.5 -3.3

Chevron Corp. 126.8 -2.0 0.9 2.1 10.2 4.5 -1.8 -3.2 -0.4 3.8 -16.2

ENI 19.6 3.2 6.0 2.9 12.9 13.4 1.3 0.3 2.2 7.5 -1.0

Royal Dutch Shell plc 2,449 0.5 1.0 3.7 12.8 18.0 -0.3 -2.5 3.6 10.5 12.9

Repsol 19.4 2.5 6.3 2.7 9.6 11.9 -0.9 -1.9 2.7 0.6 -18.8

Statoil 180.8 3.9 0.1 -2.1 12.1 34.0 2.3 -2.8 -1.3 0.8 11.7

Suncor Energy 44.1 -1.2 2.8 2.9 19.4 21.6 -0.9 0.4 -2.1 10.5 0.3

Total 51.8 3.1 6.3 -0.3 12.2 22.9 0.7 -0.4 1.7 9.4 10.8

ExxonMobil Corporation 98.4 -1.1 -0.6 -3.2 3.5 12.6 -0.8 -4.7 -5.7 -2.8 -8.1

Source: Thomson Reuters

Figure 22: Valuation comparison table (as of 4 September)

P/E EPS growth EV/EBITDA P/B ROE Net D/E

Target U/(D) Mkt Cap Div. yield FCF yield (x) (%) (x) (x) (%) (%)

Company Ticker Rat. FX Price Price % US$ mn 14E 14E 14E 15E 14E 15E 14E 15E 14E 14E 14E

PetroChina 0857.HK N HKD 11.62 10.30 -11% 245,847 3.6% 2.7% 12.5 12.2 4% 2% 5.3 5.1 1.6 13% 35%

Sinopec 0386.HK O HKD 8.14 10.00 23% 112,163 3.9% 3.7% 10.2 8.7 11% 17% 4.6 4.2 1.2 12% 41%

Reliance Industries RELI.BO O INR 1,024 1,230 20% 54,794 0.8% -9.6% 14.7 13.6 8% 8% 12.3 10.6 1.7 11% 48%

PTT PTT.BK O THB 331 388 17% 29,471 3.8% 9.5% 9.2 8.8 9% 4% 4.4 4.3 1.3 14% 29%

Gazprom GAZPq.L U USD 7.5 6.5 -13% 85,732 3.8% -22.7% N/A N/A -55% -42% 14.8 62.5 0.6 -5% 10%

Petrobras PBR N USD 19.3 14.0 -28% 126,075 3.0% -16.5% 15.0 10.0 -23% 50% 8.3 6.3 0.8 5% 74%

BG Group plc BG.L U GBp 1,233 1,100 -11% 68,664 1.6% -3.8% 17.3 17.3 -10% 0% 7.8 6.8 1.9 11% 35%

BP BP.L N GBp 455 505 11% 136,191 5.3% 5.3% 9.6 9.1 10% 5% 4.2 4.1 1.0 11% 20%

Chevron Corp. CVX.N O USD 127 150 18% 241,385 3.3% 0.7% 11.7 10.7 0% 10% 4.7 4.4 1.5 13% 9%

ENI ENI.MI U EUR 20 18 -8% 92,085 5.7% 3.1% 16.4 14.2 4% 15% 4.3 4.1 1.2 7% 25%

Royal Dutch Shell plc RDSa.L O GBp 2,449 2,700 10% 254,062 4.7% 4.5% 9.7 10.1 33% -4% 3.9 4.2 1.3 14% 15%

ExxonMobil Corporation XOM.N N USD 98.4 95.0 -3% 425,037 2.7% 4.5% 12.7 11.3 9% 13% 5.6 5.0 1.0 8% 12%

Average 4% -1% 12.5 11.5 2% 6% 6.2 8.9 1.3 10% 27%


08 September 2014

PTT


Companies Mentioned (Price as of 05-Sep-2014)

BG Group plc (BG.L, 1233.0p) BP (BP.L, 455.0p) Chevron Corp. (CVX.N, $126.8) China Petroleum & Chemical Corporation - H (0386.HK, HK$8.13) ENI (ENI.MI, €19.58) ExxonMobil Corporation (XOM.N, $98.36) Gazprom (GAZPq.L, $7.47) PTT Global Chemical (PTTGC.BK, Bt63.75, NEUTRAL, TP Bt65.0) PTT Public Company Limited (PTT.BK, Bt331.0, OUTPERFORM, TP Bt388.0) PetroChina (0857.HK, HK$11.48) Petrobras (PBR.N, $19.33) Reliance Industries (RELI.BO, Rs1025.2) Repsol (REP.MC, €19.365) Rosneft (ROSN.MM, Rbl236.54) Royal Dutch Shell plc (RDSa.L, 2449.0p) Sasol Limited (SOLJ.J, R637.08) Siam Cement (SCC.BK, Bt448.0) Statoil (STL.OL, Nkr180.8) Suncor Energy (SU.TO, C$44.08) Surgutneftegas (SNGS.MM, Rbl26.775) Total (TOTF.PA, €51.77)

Disclosure Appendix

Important Global Disclosures

I, Paworamon (Poom) Suvarnatemee, CFA, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

3-Year Price and Rating History for PTT Global Chemical (PTTGC.BK)

PTTGC.BK Closing Price Target Price

Date (Bt) (Bt) Rating

21-Oct-11 54.00 63.00 N *

02-May-12 71.00 89.00 O

05-Jun-12 53.25 73.00

12-Jul-12 56.25 69.00

15-Oct-12 59.00 72.00

02-Jan-13 71.25 95.00

17-Apr-13 66.50 80.00

15-May-13 75.25 90.00

26-Jun-13 67.50 85.00

04-Sep-13 70.00 90.00

11-Nov-13 79.75 95.00

12-Mar-14 72.00 90.00

24-Jun-14 66.25 80.00

27-Jun-14 67.75 75.00 N

21-Jul-14 67.00 72.00

01-Sep-14 62.25 65.00

* Asterisk signifies initiation or assumption of coverage.

N EU T RA L

O U T PERFO RM

08 September 2014

PTT


3-Year Price and Rating History for PTT Public Company Limited (PTT.BK)

PTT.BK Closing Price Target Price

Date (Bt) (Bt) Rating

13-Jan-12 322.00 374.00 N

20-Apr-12 354.00 376.00

11-Jul-12 333.00 340.00

15-Oct-12 313.00 344.00

04-Feb-13 362.00 362.00

22-May-13 347.00 382.00

13-Jun-13 312.00 380.00

26-Jun-13 336.00 374.00

10-Sep-13 339.00 351.00

06-Jan-14 264.00 355.00 O

17-Feb-14 297.00 345.00

12-Mar-14 295.00 338.00

24-Jun-14 297.00 337.00

27-Jun-14 312.00 363.00

25-Jul-14 334.00 368.00

* Asterisk signifies initiation or assumption of coverage.

N EU T RA L

O U T PERFO RM

The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities

As of December 10, 2012 Analysts’ stock rating are defined as follows:

Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark*over the next 12 months.

Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months.

Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months.

*Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ra tings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin Ame rican and non-Japan Asia stocks, ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark; prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stocks, 12 -month rolling yield is incorporated in the absolute total return calculation and a 15% and a 7.5% threshold replace the 10-15% level in the Outperform and Underperform stock rating definitions, respectively. The 15% and 7.5% thresholds replace the +10-15% and -10-15% levels in the Neutral stock rating definition, respectively. Prior to 10th December 2012, Japanese ratings were based on a stock’s total return relative to the average total return of the relevant country or regional benchmark.

Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances.

Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward.

Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation:

Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months.

Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months.

Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months.

*An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover multiple sectors.

08 September 2014

PTT


Credit Suisse's distribution of stock ratings (and banking clients) is:

Global Ratings Distribution

Rating Versus universe (%) Of which banking clients (%)

Outperform/Buy* 44% (54% banking clients)

Neutral/Hold* 40% (51% banking clients)

Underperform/Sell* 13% (44% banking clients)

Restricted 3%

*For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdin gs, and other individual factors.

Credit Suisse’s policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the market that may have a material impact on the research views or opinions stated herein.

Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: http://www.csfb.com/research and analytics/disclaimer/managing_conflicts_disclaimer.html

Credit Suisse does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot be used, by any taxpayer for the purposes of avoiding any penalties.

Price Target: (12 months) for PTT Public Company Limited (PTT.BK)

Method: We arrive at Bt388/sh target price for PTT based on a Sum-Of-The-Part (SOTP) valuation at the target price of its affiliates. We have factored in 25% probability of NGV and LPG prices increase.

Risk: Key risks to our target price of Bt388 for PTT include: (1) oil prices; (2) refining margins; (3) petrochemicals margins; (4) the Thailand economy and therefore gas demand growth; and (5) construction risks for new projects.

Price Target: (12 months) for PTT Global Chemical (PTTGC.BK)

Method: Our target price for PTTGC of Bt65/share is set in line with regional peers considering ROE (return on equity) generation and P/B (price-to-book) applied to FY15E, and weighing in a 50% probability of LPG prices moved to international price.

Risk: Risks that could impede achievement of our PTTGC target price of Bt65/sh include its exposure to the volatility of oil prices, petrochemical prices, and exchange rate. Also, there is a risk that PTTGC may reinvest its free cash flow in lower-return projects.

Please refer to the firm's disclosure website at https://rave.credit-suisse.com/disclosures for the definitions of abbreviations typically used in the target price method and risk sections.

See the Companies Mentioned section for full company names

The subject company (PTT.BK, 0857.HK, 0386.HK, RELI.BO, PBR.N, BG.L, BP.L, CVX.N, ENI.MI, XOM.N) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse.

Credit Suisse provided investment banking services to the subject company (PTT.BK, PBR.N, BP.L, XOM.N) within the past 12 months.

Credit Suisse provided non-investment banking services to the subject company (XOM.N) within the past 12 months

Credit Suisse has managed or co-managed a public offering of securities for the subject company (PTT.BK, BP.L, XOM.N) within the past 12 months.

Credit Suisse has received investment banking related compensation from the subject company (PTT.BK, PBR.N, BP.L, XOM.N) within the past 12 months

Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (PTT.BK, 0857.HK, 0386.HK, RELI.BO, PBR.N, BG.L, BP.L, CVX.N, ENI.MI, XOM.N) within the next 3 months.

Credit Suisse has received compensation for products and services other than investment banking services from the subject company (XOM.N) within the past 12 months

As of the date of this report, Credit Suisse makes a market in the following subject companies (PBR.N, CVX.N, XOM.N).

As of the end of the preceding month, Credit Suisse beneficially own 1% or more of a class of common equity securities of (0857.HK, 0386.HK).

Credit Suisse has a material conflict of interest with the subject company (0857.HK) . Any Nielsen Media Research material contained in this report represents Nielsen Media Research's estimates and does not represent facts. NMR has neither reviewed nor approved this report and/or any of the statements made herein.

Credit Suisse has a material conflict of interest with the subject company (0386.HK) . Credit Suisse is acting as financial advisor to both CNOOC Ltd. and SINOPEC on the acquisition of Marathon Oil Corporation's 20% interest in Block 32, offshore Angola.

08 September 2014

PTT


For other important disclosures concerning companies featured in this report, including price charts, please visit the website at https://rave.credit-suisse.com/disclosures or call +1 (877) 291-2683.

Important Regional Disclosures

Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report.

The analyst(s) involved in the preparation of this report have not visited the material operations of the subject company (PTT.BK, PTTGC.BK, 0857.HK, 0386.HK, RELI.BO, GAZPq.L, PBR.N, BG.L, BP.L, CVX.N, ENI.MI, RDSa.L, XOM.N) within the past 12 months

Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares; SVS--Subordinate Voting Shares.

Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report.

For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit http://www.csfb.com/legal_terms/canada_research_policy.shtml.

The following disclosed European company/ies have estimates that comply with IFRS: (GAZPq.L, BG.L, BP.L, ENI.MI, RDSa.L, XOM.N).

Credit Suisse has acted as lead manager or syndicate member in a public offering of securities for the subject company (PTT.BK, PBR.N, BP.L, ENI.MI, XOM.N) within the past 3 years.

As of the date of this report, Credit Suisse acts as a market maker or liquidity provider in the equities securities that are the subject of this report.

Principal is not guaranteed in the case of equities because equity prices are variable.

Commission is the commission rate or the amount agreed with a customer when setting up an account or at any time after that.

For Thai listed companies mentioned in this report, the independent 2013 Corporate Governance Report survey results published by the Thai Institute of Directors Association are being disclosed pursuant to the policy of the Office of the Securities and Exchange Commission: PTT Public Company Limited (Excellent) , PTT Global Chemical (Excellent)

To the extent this is a report authored in whole or in part by a non-U.S. analyst and is made available in the U.S., the following are important disclosures regarding any non-U.S. analyst contributors: The non-U.S. research analysts listed below (if any) are not registered/qualified as research analysts with FINRA. The non-U.S. research analysts listed below may not be associated persons of CSSU and therefore may not be subject to the NASD Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

Credit Suisse Securities (Thailand) Limited .............................................. Paworamon (Poom) Suvarnatemee, CFA ; Wattana Punyawattanakul

For Credit Suisse disclosure information on other companies mentioned in this report, please visit the website at https://rave.credit-suisse.com/disclosures or call +1 (877) 291-2683.

08 September 2014

PTT


References in this report to Credit Suisse include all of the subsidiaries and affiliates of Credit Suisse operating under its investment banking division. For more information on our structure, please use the following link: https://www.credit-suisse.com/who_we_are/en/This report may contain material that is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject Credit Suisse AG or its affiliates ("CS") to any registration or licensing requirement within such jurisdiction. All material presented in this report, unless specifically indicated otherwise, is under copyright to CS. None of the material, nor its content, nor any copy of it, may be altered in any way, transmitted to, copied or distributed to any other party, without the prior express written permission of CS. All trademarks, service marks and logos used in this report are trademarks or service marks or registered trademarks or service marks of CS or its affiliates. The information, tools and material presented in this report are provided to you for information purposes only and are not to be used or considered as an offer or the solicitation of an offer to sell or to buy or subscribe for securities or other financial instruments. CS may not have taken any steps to ensure that the securities referred to in this report are suitable for any particular investor. CS will not treat recipients of this report as its customers by virtue of their receiving this report. The investments and services contained or referred to in this report may not be suitable for you and it is recommended that you consult an independent investment advisor if you are in doubt about such investments or investment services. Nothing in this report constitutes investment, legal, accounting or tax advice, or a representation that any investment or strategy is suitable or appropriate to your individual circumstances, or otherwise constitutes a personal recommendation to you. CS does not advise on the tax consequences of investments and you are advised to contact an independent tax adviser. Please note in particular that the bases and levels of taxation may change. Information and opinions presented in this report have been obtained or derived from sources believed by CS to be reliable, but CS makes no representation as to their accuracy or completeness. CS accepts no liability for loss arising from the use of the material presented in this report, except that this exclusion of liability does not apply to the extent that such liability arises under specific statutes or regulations applicable to CS. This report is not to be relied upon in substitution for the exercise of independent judgment. CS may have issued, and may in the future issue, other communications that are inconsistent with, and reach different conclusions from, the information presented in this report. Those communications reflect the different assumptions, views and analytical methods of the analysts who prepared them and CS is under no obligation to ensure that such other communications are brought to the attention of any recipient of this report. Some investments referred to in this report will be offered solely by a single entity and in the case of some investments solely by CS, or an associate of CS or CS may be the only market maker in such investments. 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Structured securities are complex instruments, typically involve a high degree of risk and are intended for sale only to sophisticated investors who are capable of understanding and assuming the risks involved. The market value of any structured security may be affected by changes in economic, financial and political factors (including, but not limited to, spot and forward interest and exchange rates), time to maturity, market conditions and volatility, and the credit quality of any issuer or reference issuer. Any investor interested in purchasing a structured product should conduct their own investigation and analysis of the product and consult with their own professional advisers as to the risks involved in making such a purchase. Some investments discussed in this report may have a high level of volatility. High volatility investments may experience sudden and large falls in their value causing losses when that investment is realised. Those losses may equal your original investment. Indeed, in the case of some investments the potential losses may exceed the amount of initial investment and, in such circumstances, you may be required to pay more money to support those losses. Income yields from investments may fluctuate and, in consequence, initial capital paid to make the investment may be used as part of that income yield. Some investments may not be readily realisable and it may be difficult to sell or realise those investments, similarly it may prove difficult for you to obtain reliable information about the value, or risks, to which such an investment is exposed. This report may provide the addresses of, or contain hyperlinks to, websites. Except to the extent to which the report refers to website material of CS, CS has not reviewed any such site and takes no responsibility for the content contained therein. Such address or hyperlink (including addresses or hyperlinks to CS's own website material) is provided solely for your convenience and information and the content of any such website does not in any way form part of this document. Accessing such website or following such link through this report or CS's website shall be at your own risk. This report is issued and distributed in Europe (except Switzerland) by Credit Suisse Securities (Europe) Limited, One Cabot Square, London E14 4QJ, England, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. This report is being distributed in Germany by Credit Suisse Securities (Europe) Limited Niederlassung Frankfurt am Main regulated by the Bundesanstalt fuer Finanzdienstleistungsaufsicht ("BaFin"). This report is being distributed in the United States and Canada by Credit Suisse Securities (USA) LLC; in Switzerland by Credit Suisse AG; in Brazil by Banco de Investimentos Credit Suisse (Brasil) S.A or its affiliates; in Mexico by Banco Credit Suisse (México), S.A. (transactions related to the securities mentioned in this report will only be effected in compliance with applicable regulation); in Japan by Credit Suisse Securities (Japan) Limited, Financial Instruments Firm, Director-General of Kanto Local Finance Bureau (Kinsho) No. 66, a member of Japan Securities Dealers Association, The Financial Futures Association of Japan, Japan Investment Advisers Association, Type II Financial Instruments Firms Association; elsewhere in Asia/ Pacific by whichever of the following is the appropriately authorised entity in the relevant jurisdiction: Credit Suisse (Hong Kong) Limited, Credit Suisse Equities (Australia) Limited, Credit Suisse Securities (Thailand) Limited, regulated by the Office of the Securities and Exchange Commission, Thailand, having registered address at 990 Abdulrahim Place, 27th Floor, Unit 2701, Rama IV Road, Silom, Bangrak, Bangkok 10500, Thailand, Tel. +66 2614 6000, Credit Suisse Securities (Malaysia) Sdn Bhd, Credit Suisse AG, Singapore Branch, Credit Suisse Securities (India) Private Limited (CIN no. U67120MH1996PTC104392) regulated by the Securities and Exchange Board of India (registration Nos. INB230970637; INF230970637; INB010970631; INF010970631), having registered address at 9th Floor, Ceejay House, Dr.A.B. Road, Worli, Mumbai - 18, India, T- +91-22 6777 3777, Credit Suisse Securities (Europe) Limited, Seoul Branch, Credit Suisse AG, Taipei Securities Branch, PT Credit Suisse Securities Indonesia, Credit Suisse Securities (Philippines ) Inc., and elsewhere in the world by the relevant authorised affiliate of the above. Research on Taiwanese securities produced by Credit Suisse AG, Taipei Securities Branch has been prepared by a registered Senior Business Person. Research provided to residents of Malaysia is authorised by the Head of Research for Credit Suisse Securities (Malaysia) Sdn Bhd, to whom they should direct any queries on +603 2723 2020. 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Investment principal on bonds can be eroded depending on sale price or market price. In addition, there are bonds on which investment principal can be eroded due to changes in redemption amounts. Care is required when investing in such instruments. When you purchase non-listed Japanese fixed income securities (Japanese government bonds, Japanese municipal bonds, Japanese government guaranteed bonds, Japanese corporate bonds) from CS as a seller, you will be requested to pay the purchase price only.

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