January 13, 2025
More Sanction, Higher Energy Prices

Market Commentary
0 comments

The United States is set to implement some of the most stringent sanctions to date on Russia's oil industry, according to a purported U.S. Treasury document circulating among traders in Europe and Asia. This news drove global oil prices 3% higher on Friday.

The sanctions reportedly target approximately 180 vessels, numerous traders, two major oil companies, and several senior Russian oil executives. The announcement led to a rise in global oil prices, pushing them above $80 per barrel.
 

Brent Crude Oil Price


Imposed in response to Russia's war in Ukraine, these sanctions are expected to significantly disrupt Russian oil exports to its primary buyers, India and China, according to four sources involved in Russian oil trade and three Indian refinery officials.

Following sanctions imposed by the United States, the European Union, and their allies after Russia's invasion of Ukraine in 2022, India and China have emerged as the largest buyers of Russian crude. Russia accounts for approximately 10% of the global oil supply.

Yearly Oil Production (By country)

Source: Worldometer

ENRG stands as our top pick in the oil and gas sector, poised to deliver exceptional earnings growth driven by increased production, enhanced operational efficiency, and declining interest expenses.

At the current price of C. IDR 250 per share, the stock is trading at a compelling valuation of c. 4.1x projected 2025 P/E. We forecast a strong earnings CAGR of 31% for the 2024–2026 period. This robust growth, coupled with its attractive valuation, underscores ENRG's substantial upside potential.

We have also outlined the potential upside sensitivity based on varying entry and exit P/E multiples, assuming a 31% earnings CAGR, to further illustrate the opportunities presented by this investment.

Potential Upside Sensitivity


ENRG acts as a natural hedge against escalating geopolitical tensions. Rising oil prices, driven by Middle East uncertainties, could significantly benefit earnings. Our model suggests if oil prices surge to $100/barrel, net profit could increase by 28% to $125mn by 2025F.

Therefore, we maintain BUY rating for ENRG with TP of Rp720/shares.
 


Comments


Contact Us
We are happy to answer any questions you may have
Address
Sahid Sudirman Center
Jalan Jend. Sudirman Kav.86, Lantai 12
Karet Tengsin, RT.10/RW.11
Daerah Khusus Ibukota Jakarta
10220