The share prices of O&G stocks are undergoing a re-rating, largely fuelled by positive market sentiment and strong news flow. Going forward, partnerships or actual contract awards will be the main ‘push’ factor for further share price upside and the lucky companies will continue to outperform those which lack news flow. Average sector PER valuation is raised from 13.2x to 16.6x. Maintain Overweight on the sector, with top picks being Kencana Petroleum, Alam Maritim, Petra Perdana and Petra Energy.
Below are target price for selected companies in Oil & Gas Sector.
| Stocks | Price (RM) | Target price (RM) | Market Cap (RM million) | Rating |
|---|---|---|---|---|
| Alam | 1.11 | 1.50 | 820.8 | Buy |
| Coastal | 2.40 | 4.41 | 866.4 | Buy |
| Dialog | 2.14 | 2.51 | 4,243.3 | Buy |
| Kencana | 2.64 | 3.37 | 4,373.4 | Buy |
| KNM | 3.08 | 3.95 | 3,224.8 | Buy |
| MMHE | 6.39 | 6.68 | 10,224.0 | Buy |
| PCHEM | 6.35 | 6.20 | 50,800.0 | Neutral |
| P Energy | 1.95 | 2.16 | 380.3 | Buy |
| P Perdana | 1.10 | 1.57 | 327.4 | Buy |
| Tgoff | 1.64 | 2.18 | 405.1 | Buy |
| WSC | 2.25 | 2.29 | 1,518.8 | Neutral |
Source : OSK Research