Except for Alam Maritim, most of the companies under
our coverage reported earnings that were within estimates, while
a few were lower than expected. While Petronas may slow down
on rolling out new contracts, we believe that the impact would
be greater on onshore players as we anticipate offshore activities
to remain robust. We retain our OVERWEIGHT call on the oil & gas
sector.
- No major surprises. Except for Alam Maritim, most of the companies under our coverage reported earnings that were within expectations, while a few posted lower-than-expected numbers. That said, companies such as Wah Seong, Petra Energy and KNM – whose results were below our and consensus forecasts – may see better results if they are able to secure more contracts or improve on their operations.
- No major surprises. Except for Alam Maritim, most of the companies under our coverage reported earnings that were within expectations, while a few posted lower-than-expected numbers. That said, companies such as Wah Seong, Petra Energy and KNM – whose results were below our and consensus forecasts – may see better results if they are able to secure more contracts or improve on their operations.
- Be selective. Industry
sources have it that Petronas may slow down on the award of new
contracts. We believe that onshore projects such as RAPID would
have a higher risk of being delayed but we remain bullish on offshore
activities as Petronas would still need to step up oil
production before Malaysia becomes a net oil importer. Hence, investors
need to be selective when investing in O&G stocks and
look out for companies with solid orderbook to buffer earnings and
which may benefit from upcoming tenders. We prefer the fabricators,
offshore asset owners with drilling assets and companies which are
marginal oilfields.
- Maintain OVERWEIGHT.
We maintain our OVERWEIGHT call on the sector, premised on: i)
Petronas’ MYR300bn capex from 2011 to 2015, ii) positive FY13-14F
earnings growth overall, iii) anticipation of more contracts
being awarded in 2H13, including transportation and installation
jobs from the Pan Malaysia cluster, as well as contracts
relating to marginal oil fields, and iv) higher oil prices due to the
political turmoil in the Middle East, which may spur O&G activities.
-
Our Top picks are SapuraKencana Petroleum for large cap
stocks, Dayang Enterprise for mid caps and Alam Maritim in the
small cap segment.
Source: RHB
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