KUALA LUMPUR, Jan 11 — Maybank Investment Bank Research (Maybank IB) is maintaining its “neutral” call on the Malaysian oil and gas (O&G) sector as it is already adapting to the low oil price environment.

In a note today, Maybank IB said, the O&G market is on firmer ground now versus a year ago, thanks to cost rationalisation, capital discipline and cash flow preservation measures taken by the industry players.

“An absolute recovery is still a distance away, but the overall risk-reward balance has improved. The fall in share prices has absorbed much of the negatives with valuations turning attractive, making it fertile ground to bottom fish,” the research house said.

Maybank IB selected some companies that were worth buying, including Yinson Holdings Bhd, Bumi Armada Bhd, KNM Group Bhd and Dialog Group Bhd, despite the ‘neutral’ call on the industry.

At 11.08am today, Yinson was traded flat at 2.89 sen with 11,500 shares

traded, Bumi Armada slipped one sen to 98.5 sen (1.66 million shares), KNM Group was down a sen to 49 sen (2.65 million shares) and Dialog fell two sen to RM1.57 with 4.79 million shares changing hands.

The research house also noted that the Refinery and Petrochemical Integrated Development (RAPID) Project in Pengerang, Johor, Floating Production, Storage and Offloading (FPSO) and renewable energy will make thematic headlines in 2016.

“We prefer FSPO space over rigs, Offshore Support Vessels (OSVs), fabricators as it is less sensitive to the fluctuation in oil price  and capital expenditure cut, given the bankable contract exposures, financial resilience, visible growth prospects and undemanding valuation of such operators,” it said.

On OSVs, Maybank IB said the optimisation utilisation remains critical in 2016.

However, being a member of the Malaysia Offshore Support Vessels Owners’ Association (MOSVA) is a key positive, as Petronas has tightened its tenders vetting criteria and is giving charter preference to the local MOSVA OSV operators.

“As for fabrication field, new orders for the offshore fabrication will continue to disappoint this year. Order backlogs will continue to be depleted with weak replenishment and bigger yards are competing for smaller jobs to fill up space,” it added. — Bernama