KUALA LUMPUR: CIMB Equities Research is maintaining its Overweight recommendation on Malaysia’s oil and gas sector, underpinned by the strong contract pipeline arising from Petroliam Nasional’s capex.
“Our top picks are SapuraKencana for the big caps and Perisai for the small caps. For exposure to downstream activities in Pengerang, Johor, where the RAPID site is located, we like Dialog,” said the research house on Monday.
To recap, in July 2013, the media quoted CEO Tan Sri Shamsul Azhar Abbas as saying that the RM60bil refinery and petrochemical integrated development (RAPID) project is likely to be axed because of rising costs.
Over the weekend, Shamsul was reported to have said that he is pleased with the progress made on the project so far. In response to the media reports in July, Shamsul clarified that no comment has been made on the viability of the project pending the final investment decision (FID) in late-1Q14.
“Tan Sri Shamsul's clarification is comforting and should put to rest the talk that Petronas is reassessing the RAPID project due to escalating costs.
“We are also encouraged to learn that the project is still within the cost threshold based on the packages that have been tendered out. We note that in recent weeks, various tender notices related to the project have appeared in local newspapers,” it said.
CIMB Research said investors should “stay invested and watch for newsflow”. Although the RAPID project is still in the wait-and-see stage, Petronas’s capex programme is expected to keep the excitement going for the oil & gas service providers.