KUALA LUMPUR, Dec 3 — Maybank Investment Bank Bhd (Maybank IB) has maintained its positive stance on Malaysia’s oil and gas (O&G) sector as Petronas improved year-on year financials in line with its global peers’ performance.
The research house, in a note, said Petronas’ core net profit grew 76 per cent quarter-on-quarter (QoQ) to RM13 billion in the third quarter of 2021 (3Q21), taking cumulative nine months core earnings to RM27 billion, an increase of 148 per cent year-on-year (YoY).
It noted that the QoQ strength also reflected the improved market landscape, where Brent oil price trended upwards by 7.0 per cent (QoQ) to US$74 per barrel, coupled with the recovery in demand.
“Petronas risk-reward outlook is also improving, which augurs well for the O&G service providers and the government. Capital discipline will remain key, cognisant of the market’s volatility and rising costs.
“Its upcoming activity outlook for 2022 to 2024 will be scrutinised, for it will offer insights into its domestic plans,” it said.
Maybank IB also maintained its “buy” stance on Yinson, Dialog, Velesto, WSC, MMHE, BArmada, and Icon as the stocks of its choice.
Meanwhile, AmInvestment Bank Bhd (AmInvest) maintained its “overweight” call on the O&G sector.
It said the sector’s contract awards in 3Q21 to Malaysian O&G operators rebounded 86 per cent QoQ to RM4.2 billion, largely from multiple jobs awarded to Sapura Energy.
Excluding a lumpy RM1.5 billion construction award to Serba Dinamik to build a data centre in Abu Dhabi in August 2020, 3Q21 orders rose 41 per cent yoy, it said.
“Notwithstanding the Limbayong delay or potential re-bidding exercise, we remained convinced that O&G contract rollouts will gather momentum.
“We expect selected segments in the value chain to be better positioned to benefit from projects sanctioned by national oil companies, such as the floating production storage and offloading (FPSO) sub-sector, given the decimated number of operators during the previous downturn from 2015 to 2017,” it said.
AmInvest also maintained its 2021 to 2022 oil price projection at US$70 to US$75 per barrel as Brent crude oil prices have fallen from the seven-year peak of US$85 per barrel in mid-October this year to below US$70 per barrel currently on resurgent fears that the Covid-19 Omicron variant which could again dampen global demand.
“Notwithstanding rising global vaccination rollouts, we are cautious on the emergence of new viral variants and the possibility of Iranian crude reentering global markets, a rebound in US shale production, and further relaxation of the Organisation of the Petroleum Exporting Countries (Opec) production quotas,” it added. — Bernama
