Friday 29 Mar 2024
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KUALA LUMPUR (June 29): PublicInvest Research has initiated coverage of Reservoir Link Energy (RL), a provider of oil and gas (O&G) well services that supports operators in the upstream segment of the O&G industry, at 36 sen with an “outperform" rating and target price (TP) of 42 sen.

In a note on Wednesday (June 29), the research house said RL’s prospect in this segment is encouraging given the current oil prices remaining stable at above US$100/bbl, which should eventually lead to more O&G related jobs being available in the market.

It said this is on the back of Petronas’ planned capital expenditure (capex) of at least RM40 billion this year.

Furthermore, it said RL’s venture into the solar industry last year is timely given the increasing importance of renewable energy in Malaysia.

“The deal comes with a profit guarantee for 24 months, limiting downside risks.

“Growth potential in this segment is also huge, in line with the government’s aims of achieving a generation mix of 31% from renewable energy by 2025, and 40% by 2035.

“We initiate coverage of RL with an 'outperform' call and a TP of 42 sen based on 10x P/E multiple, in line with our valuation to its closest local peer,” it said.

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