OSK is bullish on the O&G industry in the immediate term as it would be very soon before new contracts are awarded, including:
- RM8-10bn worth of hook-up commissioning in the Pan Malaysia cluster
- marginal oilfields
- replacement of expiring brownfield contracts.
OSK’s top picks for the sector is SapuraKencana Petroleum (BUY FV RM3.00), Dialog (BUY FV: RM3.45) and Dayang (BUYFV: RM2.90). They like these companies for their excellent track records and believe that in the event of a slowdown in contract awards, they would still have strong orderbook.
Below are the target prices and ratings for selected Oil & Gas stock.
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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 has a Neutral outlook on the Malaysian market going into 2012 as the combination of uncertain growth outlook in the US and Asia coupled with a possible recession in Europe cloud the prospects for strong earnings growth locally.
OSK advises investors to stay cautious into mid 2012 and focus on Defensive sectors such as Consumer, Telco, Healthcare and Media with KLCI fair value of 1466 pts.
Investors are advised to Trade on Cyclical sectors such as Banks, Oil & Gas and Construction as the market dips or rallies strongly. The trading strategy to adopt is, buy when the KLCI falls towards the 1300 pts and sells when the KLCI rises towards the 1500 pts.
The tables below are OSK’s top Big/Mid/Small Caps Stocks with the target price & rating for 2012.
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OSK still foresees potential for further market retracement, although a possible deep recession can probably be averted. However, OSK maintains 2012 KLCI fair value at 1466 pts seeing a slow recovery forward unlike in 2009.
OSK is recommending Telcos, Consumer, Healthcare and Media as defensive sectors. With the market approaching 1350pts non recessionary bottom, OSK believes some Bottom “Nibbling” would be reasonable, although aggressive bottom fishing is not recommended.
The table below is the OSK top 10 stocks for a bottom ‘nibbling’ including fair value, dividend yield & rating.
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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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