KUALA LUMPUR (Jan 19): A stronger US dollar (USD) versus the ringgit favours rigs, floaters, tank terminal and shipbuilding operations but works against companies with USD borrowings and revenue in ringgit.

In a note Monday, the research house said gearing levels were generally manageable but impairment could affect a few companies due to low oil prices and immobilization of assets.

The research house said among the rigs operators were UMW Oil and Gas Corporation Bhd, Perisai Petroleum Teknologi Bhd, SapuraKencana Petroleum Bhd and Coastal Contracts Bhd.

It listed the floaters as Yinson Holdings Bhd, Bumi Armada Bhd, SapuraKencana and Perisai Petroleum; tank terminal (Dialog Group Bhd) and shipbuilding operations.

It said companies with USD borrowings and revenue in ringgit such as Perdana Petroleum Bhd, would see an adverse impact, for profits would be hurt by higher interest expense.

The research house said the net gearing levels for O&G companies were generally manageable, noting an improvement over 2008, with tighter capital discipline across most companies.

“Nonetheless, we are not ruling out several companies potentially facing impairment on off-hire assets.

“Shariah compliance is an increasingly important agenda. SapuraKencana and Perisai Petroleum have recently converted part of their conventional debts into Islamic loans, and could potentially be reinstated as Shariah compliant as early as May 2015.

“We advocate a preference for operations in the production phase, which tend to be less sensitive to capex cut and oil price volatility,” it said.