MAYBANK IB MAINTAINS POSITIVE CALL ON O&G SECTOR

KUALA LUMPUR, Jan 3  -- Maybank Investment Bank Bhd (Maybank IB) has maintained its positive stance on Malaysia’s oil and gas (O&G) sector, premised on steady Petronas activity outlook (PAO) for the year 2022 and an even steadier outlook in 2023 to 2024.

In a research note today, it said the national oil company reported a mixed performance in terms of planned versus actual activities in 2021, but the latest PAO edition reflected a cautious, optimistic outlook for 2022 and improving positivity in 2023 to 2024, based on the level of activities planned.

The research house said offshore support vessels (OSVs), hook-up and commissioning (HUC) equipment and material (supply of line pipes) and underwater services segments had outperformed during the year.

On the other hand, offshore drilling, pipeline installation, decommissioning, offshore maintenance, construction and modification operations were the underperformers.

Meanwhile, the offshore fabrication, floaters (floating production storage and offloading, floating production storage and offloading), subsea structures, offshore installation and general facilities maintenance or plant turnaround operations met expectations, it said.

“In general, Petronas remained cautiously optimistic for 2022, with a relatively similar year-on-year expectation vis-à-vis 2021. It is however more positive in 2023-24.

“That said, we see Velesto Energy Bhd, Icon Offshore Bhd, Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE), Wah Seong Corporation Bhd and Dialog Group Bhd as key beneficiaries of Petronas’ domestic activities over the next three years.

“Segment-wise, Icon and Velesto remained the best proxies to its drilling programmes. MMHE, Wah Seong, Dialog are key beneficiaries of the fabrication, pipe-coating, maintenance works while Icon is a key feature for exposure to the OSV space,” said Maybank IB.

As for oil price, the research house said its estimates remained unchanged at US$75-US$80 per barrel (bbl) for 2022.

Should oil prices continue to be strong throughout 2022 and surpass the target, the bank said it does not rule out increased activities and capital expenditures (capex) from the second half onwards.

“That said, capital remains key, for the higher oil price has led to higher costs and greater volatility -- a setback and a concern to a sustainable recovery in the market.

“Based on its five-year capex plan of RM200 billion to RM225 billion or an average of RM40 to RM45 billion per annum in 2021 to 2025, Petronas said nine per cent of the overall capex will be for its green energy agenda.

“Among its climate goals include a commitment to net-zero carbon emission by 2050 and zero routine flaring by 2030,” Maybank IB added.

-- BERNAMA