AMBANK RESEARCH MAINTAINS OVERWEIGHT RATING ON OIL AND GAS

KUALA LUMPUR, Oct 28  -- AmBank Research maintained its overweight rating on oil and gas as the down cycle in the industry has hit bottom, with the worst, experienced in April 2020. 

In April this year, Brent spot prices fell to a low of US$14 per barrel while futures inverted to an abnormal negative price due to lack of storage capacity. Currently, Brent crude spot prices has stabilised above US$40 per barrel. 

“We like Yinson Holdings Bhd as its earnings growth momentum from the maiden contributions of floating, production, storage and offloading vessels Helang, off Sarawak, Abigail-Joseph in Nigeria and Anna Nery in Brazil together with multiple charter opportunities in Brazil and Africa.

“We also continue to have ‘buy’ calls for Dialog Group Bhd and Serba Dinamik Holdings Bhd due to their resilient non-cyclical tank terminal and maintenance-based operations,” said AmBank Research in a note today.

It also recommended Petronas Gas Bhd as the group's optimal capital structure strategy and resilient earnings base translates to highly compelling dividend yields. 

AmBank Research further envisaged a slow adoption of renewable projects by local oil and gas providers given that a large segment was currently burdened by high gearing amid a low oil price environment. 

The shift towards renewable energy in Malaysia has already been underway over the past three years with Petronas operating 448 megawatt (MW) of solar capacity in India and Southeast Asia, and presently developing another 212MW, it added. 

In Malaysia, Petronas is operating and developing 50MW of solar capacity, part of which is for supply to 15 Tesco stores.

Amongst local service providers, AmBank Research said only Yinson has taken the plunge by investing US$30 million for a 95 per cent equity stake in Rising Son Energy, which has a 160MW solar farm in Bhadla Solar Park Phase II, Rajasthan, India.

-- BERNAMA