4QCY08 results were a mixed bag that leaned towards the negative. 50% of the six companies in our O&G portfolio missed our forecasts, 33% surprised on the upside while 17% broadly met our expectations. Wah Seong and Alam Maritim were the top performers while Petra Perdana was the biggest letdown. On 15 Mar, OPEC is expected to call for more production cuts, which could lift oil prices and help contracts to get off the ground.
Four big contracts up for grabs this year are Petronas’s Sabah O&G terminal, Petronas’s offshore supply vessel charters, Gulf Petroleum’s integrated O&G complex and Tanjung Agas’s supply base and marine services development. All the stocks under our O&G coverage are trading at attractive average P/Es of 5-7x. We advise investors to take profit on Petronas Dagangan and switch to our top pick, Petra Perdana, which has the cheapest ratings despite showing the most growth in our O&G portfolio. Maintain OVERWEIGHT.
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