Phillip Capital Research projects aggregate industry earnings to grow by 14% year-on-year in 2025.
PETALING JAYA: The oil and gas sector’s outlook remains bright, underpinned by sustainable energy prices and proposed capital expenditure (capex) by Petroliam Nasional Bhd (PETRONAS) and Petroleum Sarawak Bhd (Petros).
Phillip Capital Research remained “overweight” on the sector, projecting aggregate industry earnings to grow by 14% year-on-year in 2025, including for most of the companies under its coverage.
“We remain selective and favour service providers that are clear beneficiaries of the PETRONAS Activity Outlook due to its strong visibility and certainty.
“Key beneficiary segments include hook-up and commissioning (HUC), maintenance, construction and modification (MCM), offshore support vessel, well plug and abandonment, and hydraulic workover unit,” it stated in its Malaysia strategy report.
The sector fundamentals remain conducive.
Phillip Capital expected crude oil price to stay supported at US$80 a barrel in 2025, on the back of discipline Organisation of the Petroleum Exporting Countries and its allies supply cuts, geopolitical uncertainties and steady global demand.
Capex wise, it noted while PETRONAS may reduce its planned annual capex of RM60bil due to loss of income following the transfer of the downstream gas distribution business to Petros.
However, any cut will be cushioned by Petros’ proposed RM40bil in capex commitment over the next five years.
Philip Capital Research picked Dayang Enterprise Holdings Bhd
and Uzma Bhd as its top “buy” recommendations, as the firms stand to benefit from higher offshore activity levels, improved offshore vessel utilisation and elevated service/vessel rates.
It set a target price (TP) of RM4.50 per share for Dayang, backed by the firm’s record-high order book of RM5.2bil, following its recent wins of three Pan Malaysia HUC/MCM packages, and its ability to sustain strong earnings momentum in 2025.
It set a TP of RM1.45 for Uzma, which has a robust order book of RM3bil.
Also, Uzma’s completed 50 megawatt solar project is expected to drive earnings growth and strengthen its recurring income stream.
Phillip Capital Research kept its ‘buy” call on Bumi Armada Bhd with a TP of 93 sen per share on its strong prospects, driven by sustained global floating production storage and offloading vessel demand.
It added that the company’s recent syariah-compliant status and potential value- unlocking merger with MISC Bhd are expected to serve as near-term catalysts.
The research house also has “buy” calls on T7 Global Bhd (TP: 66 sen) and Pantech Group Holdings Bhd (TP: RM1.30).
