Hot Stocks O&G counters rise in anticipation of bagging more contracts

by **Cals** Thu 17 Oct 2013, 15:15

Hot Stocks O&G counters rise in anticipation of bagging more contracts

Business & Markets 2013

Written by Cynthia Blemin of theedgemalaysia.com

Thursday, 17 October 2013 14:06

KUALA LUMPUR (Oct 17): Shares of major oil & gas companies such as Petroluem Gas Bhd, Petronas Dagangan Bhd, UMW Oil & Gas and Sapurakencana Petroleum Bhd rose in active trades today as they are expected to bag new contracts soon.

Analysts said they continue to be upbeat on the sector that is flush with news flow and new tenders.

At 12.30 pm, Petroleum Gas was the top gainer after rising 24 sen or 1.06% to RM22.94. Some 234,000 shares changed hands.

Petronas Dagangan jumped 16 sen or 0.54% to RM29.80, on volume of 54,100 shares, while UMW Oil & Gas rose 12 sen or 1% to RM12.24 with some 176,800 shares traded.

Sapurakencana Petroleum also rose 5 sen or 1.3% to RM3.90 on trades of some 3.3 million shares.

Alliance Research analyst Arhnue Tan said the sector will continue to be flushed with new tenders emerging from Nosong wellhead platform, Baronia CPP in the Baram Delta EOR project and also Arthit wellhead platforms off Thailand.

“We expect more positive news flow ahead especially in Malaysia and this indicates that FY14 will be another robust year for the sector, especially in the engineering, procurement, construction and commissioning (EPCC) and engineering, procurement, construction, installation and commissioning (EPCIC) segments.

“We maintain our overweight recommendation and our sector top pick remains as SapuraKencana Petroleum,” she said in a note.

Robust contract flow is also slated to continue with new developments like marginal fields, enhanced oil recovery projects and new gas developments.

Petronas has committed to its capex plan of up to RM60 billion per annum (RM300 billion over 5 years) and more good news may emerge in late 2013 or 2014 when new fabrication jobs come on-stream, Tan noted.

Alliance said its top pick in the sector is SapuraKencana due to its attractive forward P/E valuation of 16.5 times and solid earnings visibility.

Meanwhile, M&A Securities’ head of research Rosnani Rasul pointed out today that oil and gas sector will be one of the beneficiaries of the Economic Transformation Programme (ETP) and Budget 2014.