KUALA LUMPUR (Nov 3): BIMB Securities Research has maintained its Overweight rating on the oil and gas sector and said market sell down and the recent retracement as a good opportunity to bargain hunt.
“We would recommend investors to accumulate on stocks with strong earnings visibility and order books,” it said in a note Monday.
The research house said the recent plunge in crude oil price has caused some uneasiness amongst investors as seen from the recent sell down in most oil and gas counters.
It said despite the fundamental outlook for crude oil continues to point to lower prices, traders may be unwilling selling at these already-depressed levels, especially as the supply-side risks remain elevated due to the on-going situation in the Middle East.
BIMB Securities said that technically, it expects the oil prices to remain at current levels and a near term bottom may have already been formed.
“From our technical readings, the immediate outlook for crude oil remains tentative with a high likelihood that prices will consolidate further.
“All said, we envisage prevailing fundamentals to support our local players especially with Petronas anticipated capex. Fundamentally, earnings visibility and solid orderbooks would be the dominant factors for our Buy list,” it said.
BIMB Secuities said that ahead of the result next month, it had had a relook at stocks in its coverage and revised its target price for both MMHE (TP: RM2.60) anticipating a lower earnings contributions due to a change to more conversation profit recognition method and Dayang (TP: RM4.15) after factoring in the proposed private placement exercise which it said was EPS dilutive,
It said the rest of its coverage, namely, Dialog (TP: RM1.83), Uzma (TP: RM4.08), Scomi Energy (TP: RM0.92), UMWOG (TP: RM4.31) and Wah Seong (TP: RM2.20) remain unchanged.
“We have recently reinitiated our coverage on Barakah (TP: RM1.30),” it said.