• Energy stocks have led the global stock market over the past three weeks, while Telecommunication stocks have led the APAC region. Last week, Brent Crude Oil briefly traded above US$95/bbl, and closed Friday at US$93.87/bbl. This represents a 7.4% gain since the end of August, and a gain of 24.5% since the end of June.  

• In Singapore, the trio of most traded energy stocks Rex Int, Geo Energy Resources and RH Petrogas have generated median gains of 8.2%, with a skew to their average gain given Rex International’s 357% gain from 31 Aug through to 22 Sep.

• The Singapore Depository Receipt (SDR) on ASEAN’s largest listed petroleum exploration and production company, PTT Exploration & Production, has posted consecutive positive monthly returns since starting to trade on SGX in end May 2023. In the month ending 22 September, PTTEP SDR gained 2.4$ with a aggregate traded value of S$1.85M.

• In Singapore, the trio of most traded telecommunication stock include Singtel, NetLink NBN Trust and StarHub. The trio have averaged 3.6% gains from 31 Aug through to 22 Sep. Singtel also booked the most net institutional inflow across the Singapore stock market last week, with S$35 million of net institutional inflow, while the rest of the market booked S$198 million of net outflow.

• This coincided with Singtel announcing on 18 Sep that KKR will commit up to S$1.1 billion (~US$800 million) for a 20% stake in Singtel’s regional data centre business. This will also provide Singtel access to a wider network of global customers, and Singtel is also hoping to tap into KKR's network of companies that develop new data centre cooling technologies.

Using FTSE Indices as a guide, energy stocks comprise around 5% of the value of the global stock market, while telecommunications stocks comprise around 3%. However, across Asia-Pacific the comparative sizes are vice-versa, with energy stocks making up around 3% of the region’s stock market value, while telecommunications stocks make up around 5%.

These two Sectors have recently been in play, with the past three weeks have seeing energy stocks lead the global stock market, while telecommunication stocks have led the region.

Telecommunication Stocks

The region’s largest telecommunication stock by market value, China Mobile has also bucked the Hong Kong benchmark declines over the past three weeks with a 6.7% total return in SGD terms. In Singapore, the trio of most traded telecommunication stock include Singapore Telecommunications (Singtel), NetLink NBN Trust and StarHub have averaged 3.6% gains from 31 Aug through to 22 Sep.

Source: SGX, Refinitiv (Data as of 22 Sep 2023)

Last week Singtel booked a 1.3% gain on the week, compared to the STI decline of 2.3% on the back of a significant corporate announcement.

• On 18 Sep, Singtel announced its first collaboration with US-based, leading global investment firm KKR.
• KKR will commit up to S$1.1 billion (~US$800 million) for a 20% stake in Singtel’s regional data centre business.
• With Southeast Asia's data centre market expected to grow by 17% over the next five years compared to 12% for the globe. KKR will have the option to increase its stake to 25% by 2027 at the pre agreed valuation.
• For Singtel, the collaboration will provide access to a wider network of global customers, and Singtel is also hoping to tap into KKR's network of companies that develop new data centre cooling technologies.
• Singtel's Digital InfraCo CEO Bill Chang did highlight at the August investor day that energy constraints represented a key challenge and opportunity. This is because of high carbon footprint issues with Data Centres and need to improve efficiency and transition to green energy source. He added that Singtel's Digital InfraCo did aspire to be the leading green and sustainable Data Centre Service Provider with the best inter-connectivity in the SEA region and that maintaining a diverse customer base was among its differentiation factors to win in a competitive regional market.
• Singtel also booked the most net institutional inflow across the Singapore stock market over the week, with S$35 million of net institutional inflow, while the rest of the market booked S$198 million of net outflow.

On 17 Aug, NetLink NBN Trust reported 1QFY24 (ended 30 June) profit after tax increased 2.1% from 1QFY23. In a presentation on 24 Aug, the Trustee-Manager, NetLink NBN Management Pte Ltd of relayed its strategic focus was to

• Improve network reach, densification and capability in support of NetLink’s fibre-to-anywhere deployment;
• Improve competitiveness of NetLink’s Fibre in enterprise and Government segment;
• Provide expertise and infrastructure to support the upgrade of the NBN;
• Explore opportunities to invest in telecoms infrastructure businesses overseas which are likely to generate a stable cashflow; and
• Create brand affinity with end-users.

On 3 Aug, StarHub reported a 26% YoY increase in 1HFY23 (ended 30 June) attributable net profit from 1HFY22.

• StarHub’s largest segment by revenue in 1H23 was its service Mobile contributing S$303 million of its total S$1.1 billion revenue. The service Mobile revenue was up 12.8% YoY from 1HFY22, due to higher Postpaid and Prepaid revenues.
• The Group continues to execute on its DARE+ programme, focusing on elevating customer lifetime value through Infinity Play and the convergence of the 3C’s (Connectivity, Cloud and Cybersecurity) for enterprise customers.
• StarHub CEO Nikhil Eapen maintains that for consumers, this means an expanded menu of lifestyle, entertainment and connectivity options that they can access anytime, anywhere, on any device, while for enterprises, StarHub plans to be a trusted single platform for their cybersecurity, cloud, info-communications technology and network connectivity needs.

Energy Stocks

With Saudi Arabia and Russia earlier this month extending their oil supply cuts to year-end, Brent Crude Oil has rallied. Brent Crude Oil futures briefly traded above US$95/bbl last week, and closed Friday at US$93.87/bbl, which represents a 7.4% gain since the end of Aug, and a 24.5% gain since end June. While Aramco is the globe’s largest energy stock by value, it has been comparative flat in performance since end August, however both Exxon Mobil and Chevron have average gains in the vicinity of 4% in SGD terms.

In Singapore, the trio of most traded energy stocks Rex International, Geo Energy Resources and RH Petrogas have generated median gains of 8.2%, with a skew to their average gain given Rex International’s 35.7% gain from 31 Aug through to 22 Sep.

A multinational explorer and producer (E&P), Rex International provided a business and strategy update on 12 Sep. Among the highlights, Rex International noted:

• It remains committed to its core oil & gas business for the foreseeable future;
• Production from Norway in Aug 2023 totalled 7,726 barrels of oil equivalent per day, a 182% YoY increase with the addition of production from the Yme Field.
• Tax receivables of US$63.6 million from the Norwegian tax authorities in November 2023 will have positive impact on cash available within the Group, and it is on the lookout to acquire more production or near producing oil & gas projects to increase reserves and daily production.

Geo Energy Resources is a major Indonesian coal producer with an established track record in operating coal mines, coal production and selling coal throughout the region.

• The company reported a US$28 million net profit in 1HFY23 (ended 30 June) compared to its 1H record net profit of US$106 million in 1HFY22. This coincided with the normalisation of coal prices in 1H23 with an increase in China’s domestic coal output and resumption of imports from Australia.
• This saw an average ICI-4 price of US$70.46 per tonne in 1H23, versus an average ICI-4 price of US$86.06 in 2022. Note while the indicative average ICI-4 price in the 3Q23 through to 22 Sep was in the vicinity of US$54, using SGX IHS McCloskey Futures, the ICI-4 price has steadily gained over the past 12 weeks from US$52 to US$63 per tonne.
• On Aug 25, Geo Energy Resources announced it had  secured option to become major shareholder of an Electric Vehicle business in Indonesia, through an initial investment of US$4 million, with option to enter into further agreements to increase its capital investment for up to an additional US$36 million in Charged Asia Pte Ltd to become the majority shareholder.

RH Petrogas is an oil and gas upstream pure play with activities covering the exploration, development and production of oil and gas resources.

• With its 1HFY23 (ended 30 June) results RH Petrogas reiterated that a 24% YoY decrease in its 1HFY23 revenue was mainly attributable to a 25.5% decrease in the average realised oil price from US$102 per barrel in 1H22 to US$76 per barrel in 1H23.
• In a presentation on 23 Aug, RH Petrogas maintained that oil prices remained volatile due to geopolitical and economic uncertainties and that two key supply side factors were underinvestment in global E&P since 2015 and OPEC supporting prices with production cuts.
• Looking forward, RH Petrogas has also noted that while  crude oil sales makes-up over 80% of the Group’s revenue in the longer term, the Group expects that gas will make-up an increasingly larger share if its exploration efforts pay off. This is in line with expectations that natural gas will be a transition fuel as the world moves towards cleaner energy, consistent with scenarios modelled by organisations such as the International Energy Agency.

PTT Exploration & Production is ASEAN’s largest listed petroleum exploration and production company, with a market cap of S$25B, is available to trade on SGX as a Singapore Depository Receipts. 

• The company, which is mainly involved in producing natural gas, crude oil and condensate, posted higher than expected net profit in 2QFY23, at S$610m – a 7% increase from the previous quarter from gains on foreign exchange forward contracts.
• Looking ahead, the company expects to maintain unit cost in the range US$27 – 28 per barrel of oil, lower than reported unit cost of 2022. It also expects the average sales volume for the third quarter and full year 2023 to be approximately 470,000 and 464,000 barrels of oil equivalent per day, respectively.  

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