As jobs visibility improves, 2012 should generally be a better year for the Malaysian O&G industry compared to 2011. This year and next year’s focus should still be on marginal oilfields. OSK expects the overlap of marginal oilfield and deepwater activities to boost O&G services providers’ utilization rates to their peaks.
The development of onshore O&G projects would also continue to hog the headlines moving forward.
OSK Maintains Overweight on the sector, with Kencana Petroleum and Dialog Group being the top picks.
Below are the target prices and ratings for selected Oil & Gas stock.
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OSK remain OVERWEIGHT on the O&G industry and Buy calls on both Coastal and Dayang.
OSK like Coastal for its mergers and acquisition story. OSK re-iterate their view that it would be a matter of time before Coastal finds itself a suitable partner for M&A purposes.
OSK also like Dayang due to it’s stable, recurring income. This is because oilfield and platform maintenance are all-year-round jobs and having a slice of this business pie is always better than getting one-off jobs as they provide assurance of future earnings sustainability
Below are the target prices and ratings for selected Oil & Gas stock.
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ECMLibra Investment Research continue to be Overweight on the sector as news flow continue to be strong. But ECMLibra see that bigger caps like MMHE and even SapuraCrest hitting peak cycle valuations.
As such, ECMLibra pay more attention to small cap laggards like Wah Seong, Alam Maritim and even Perdana Petroleum. The only big cap ECMLibra favour now is Petronas Gas due to the upside potential from the new re-gasification terminal.
Selected Oil & Gas Stocks Fair Value, Target Price & Dividend Yield
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OSK remain OVERWEIGHT on the O&G sector given the numerous opportunities to be mined by O&G service providers, spurred on by Pengerang’s development.
Two recent developments are;
- Dialog Group signed a Development Cum Joint Venture Agreement (DJVA) with the Johor State Government granting it the right to start land reclamation works in Pengerang in Malaysia’s Johor state, and use the reclaimed land for the construction of a Deepwater O&G Terminal.
- Petronas announced that its USD20bn Refinery and Petrochemical Integrated Development (RAPID) project, also to be located in Pengerang, will house an oil refinery, petrochemical plants and possibly, a LNG regas terminal.
Below are the target prices and ratings for selected Oil & Gas stock.
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KNM shares price has been beaten again recently due to lower than expected earnings for first quarter ending 31st March 2011. On 30th May 2011 KNM share price closed at RM2.10.
This is the second time this year, KNM share price drop drastically. In February 2011, the price drop from RM2.80 to RM2.30 due to lowest recorded profit. But the price recover to RM2.85 in 2 weeks.
Despite the negative news, many research houses are still maintaining a “buy” call for KNM because their order book is still strong. They believe, it is a good opportunity to accumulate KNM share due to lower share price.
The table below are the compilation of KNM fair value / target price various research house.
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