We left the recent 16th Asia Oil & Gas Conference feeling more bullish on the sector. Higher oil prices and steady demand growth have helped the sector’s capex to stage a welcome recovery. Global upstream capex could hit a new high of US$410bn this year. Petronas’s 5-year capex target is RM250bn, translating into annual capex of RM5bn, which would be a new record. Separately, the recently concluded 1Q11 reporting season saw the sector’s best performance since 4Q08 when we started our quarterly reviews. For the first time, all stocks met or beat our expectations.
We remain OVERWEIGHT on the sector and maintain all our stock recommendations, earnings forecasts and target prices. Economic Transformation Programme newsflow is a potential re-rating catalyst for the sector, along with more contract awards. SapuraCrest stays as our top pick.
We remain OVERWEIGHT on the sector and maintain all our stock recommendations, earnings forecasts and target prices. Economic Transformation Programme newsflow is a potential re-rating catalyst for the sector, along with more contract awards. SapuraCrest stays as our top pick.
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