Oil & Gas : RHB Research maintains Neutral on O&G
KUALA LUMPUR: RHB Research has maintained its Neutral on the oil and gas (O&G) sector, since there is still a lack of any signs of earnings delivery, but see instead only selective values from stocks with strong cash flow andlong-term firm orderbook.
In a note on Tuesday, the research house said O&G stocks fell by 5%-20% on Monday, following Petronas’ signal to cut 15%-20% of capex in FY15.
"With most stocks closing at 6-8 times P/E, we believe this level does not accurately reflect the fundamentals of a few quality O&G stocks under our coverage," it said.
It said during 2009-2013, Petronas’ capex spending averaged RM45bil per annum. Assuming a 15-20% cut in overall capex from its current annualized 9M14 capex of RM56bil, it would still be within its estimates of Petronas capex spending of RM40-60bil per annum.
Petronas reiterated that maintenance capex and ongoing projects will continue, it said.
However, RHB believed domestic contracts will still goon albeit at a slower pace compared with the capex up-cycle of 2011-2013.
"We believe Petronas could defer any of the planned 25-27 marginal fields and 10-14 enhanced oil recovery (EOR) projects as its 3-3.5% production growth targets can be achieved, via the Oct 2014 first oil of deepwater Gumusut-Kakap and Nov 2014 first gas of Kebabangan field," it added.
RHB noted that it valued service players and O&G operators with quality offshore assets, proven track record, management guidance, long-term firm orderbook and diversification strategies.
"In this regard, we like Dialog, Dayang and Perdana," it added.
http://www.thestar.com.my
KUALA LUMPUR: RHB Research has maintained its Neutral on the oil and gas (O&G) sector, since there is still a lack of any signs of earnings delivery, but see instead only selective values from stocks with strong cash flow andlong-term firm orderbook.
In a note on Tuesday, the research house said O&G stocks fell by 5%-20% on Monday, following Petronas’ signal to cut 15%-20% of capex in FY15.
"With most stocks closing at 6-8 times P/E, we believe this level does not accurately reflect the fundamentals of a few quality O&G stocks under our coverage," it said.
It said during 2009-2013, Petronas’ capex spending averaged RM45bil per annum. Assuming a 15-20% cut in overall capex from its current annualized 9M14 capex of RM56bil, it would still be within its estimates of Petronas capex spending of RM40-60bil per annum.
Petronas reiterated that maintenance capex and ongoing projects will continue, it said.
However, RHB believed domestic contracts will still goon albeit at a slower pace compared with the capex up-cycle of 2011-2013.
"We believe Petronas could defer any of the planned 25-27 marginal fields and 10-14 enhanced oil recovery (EOR) projects as its 3-3.5% production growth targets can be achieved, via the Oct 2014 first oil of deepwater Gumusut-Kakap and Nov 2014 first gas of Kebabangan field," it added.
RHB noted that it valued service players and O&G operators with quality offshore assets, proven track record, management guidance, long-term firm orderbook and diversification strategies.
"In this regard, we like Dialog, Dayang and Perdana," it added.
http://www.thestar.com.my
