HLIB Maintains "Overweight" On O&G, Names Dialog, Dayang, Deleum As Top Picks
KUALA LUMPUR, July 1 (Bernama) -- Hong Leong Investment Bank (HLIB) Research has maintained an "Overweight" rating on the oil and gas sector, with Brent crude oil price forecasts unchanged at US$67 per barrel for 2025 and US$70 per barrel for 2026.
The investment bank said oil prices are expected to hover between US$60 and US$65 per barrel in the second half of 2025, barring any escalation in geopolitical conflict.
It noted that the United States (US) President Donald Trump announced last week that Israel and Iran had agreed to a ceasefire, which pushed Brent oil prices below US$70 per barrel and effectively erased earlier gains driven by geopolitical tensions.
"The oil price pullback is not entirely surprising, as the conflict had minimal impact on the physical oil market," it said in a sector outlook today.
On a macro level, HLIB Research observed that oil prices are skewed to the downside from current levels, due to dissipating geopolitical premiums amid Middle East conflict de-escalation, increasing output from OPEC+ and a potential demand slowdown triggered by US Liberation Day tariffs.
"However, our 'Overweight' rating is based on a bottom-up view of the sector, as most of our stock recommendations are 'Buy' due to favourable fundamentals, strong earnings profile, and undemanding valuation across the sector," it said.
The research house has a "Buy" call on Dialog Bhd with a target price (TP) of RM2.59, citing that the anticipated award of long-term tank terminal contracts for Phase 3 of its Pengerang Deepwater Terminals, which is expected to re-rate the stock.
It also favours Dayang Enterprise Holdings Bhd (Buy, TP: RM2.67), viewing it as an ideal proxy to capitalise on the robust offshore maintenance order pipeline and the persistent shortage of Malaysian-flagged offshore supply vessels.
Among small caps, Deleum Bhd (Buy, TP: RM2.00) is its top pick, underpinned by projected double-digit earnings growth driven by rising demand for gas turbine services and increased activity in oilfield integrated services from recently awarded contract packages. The stock also offers an attractive yield and compelling valuation.
HLIB Research also continues to favour Velesto Energy Bhd (Buy, TP: 21 sen), citing superior operating margin expansion, supported by lower overheads and operating expenses, ongoing cost optimisation, stable fleet utilisation, and an undemanding valuation alongside an attractive yield.
-- BERNAMA
