KUCHING: Comparisons of valuations of Malaysian oil and gas (O&G) stocks to regional peers by investors abroad remain a key setback to many investment funds increasing their exposure to the sector.
Outlining this was Maybank Investment Bank Bhd (Maybank IB) which, on an overseas excursion, noted while some seasoned fund managers were unfazed by the premium valuations, many were still finding valuations of Malaysian O&G stocks relatively demanding when compared with those of regional peers.
It also highlighted that investors were generally focused on five key stocks – SapuraKencana Petroleum Bhd (SapuraKencana), Bumi Armada Bhd (Bumi Armada), Dialog Group Bhd (Dialog), Petronas Gas Bhd (Petronas Gas) and Perisai Petroleum Teknologi Bhd (Perisai).
These five stocks as well as lynchpin Petroliam Nasional Bhd’s (Petronas) domestic agenda prompted the investment bank to remain bullish on the sector, as it expected “stronger job flows this year after a lacklustre 2012.”
“A majority of the fund managers we met largely concurred with our view that Malaysia’s O&G sector is single-handedly driven by Petronas’ energy security agenda.
“The big picture for 2013 is that capex (capital expenditure) spending is set to intensify and contract flows are on an uptrend across the various value chains.
“There was however skepticism over project implementation, owing to the delays and re-tenders of some projects last year,” Maybank IB noted.
It added that investors were naturally concerned about the continuity and implementation of Petronas’ domestic programmes post the general elections, to which it viewed that regardless of the outcome of the elections, Petronas’ agenda would be intact, largely on energy security concerns.
“The immediate need is to arrest declining hydrocarbon production. To this end, it is targeting production growth of 3.5 per cent per annum over the next five years.