SECTOR FOCUS OF THE DAY
Oil & Gas Sector: Fair 1Q results albeit MISC’s low tanker rates OVERWEIGHT
Fairly decent 1Q2018 report card. The 1Q2018 results for the 8 stocks under our coverage was fairly decent as 5 companies came in within expectations with 2 below. The only company that exceeded expectations was Dialog Group which was supported by its Middle East operations amid growing demand for specialist products/services together with rising activities for its 60% stake in Jubail Supply Base Phase 1, Saudi Arabia. The two weaker-than-expected performers were MISC, mauled by low petroleum tanker charter rates and decline in offshore margins, while Velesto Energy was dented by decreased rig utilisation rates.
QoQ sector core net profit fell 13% largely from MISC’s weak performance, which was partly offset by a substantive decline fall in Sapura Energy’s losses. Excluding MISC’s results, the sector’s core net profit would instead have risen by 31% QoQ from improved results of Sapura Energy and Bumi Armada.
Maintain OVERWEIGHT view on the sector given the stabilising crude oil prices above US$75/barrel, underpinned by the resumption of nuclear sanctions on Iran and deterioration in Venezuela’s output. Notwithstanding Petronas’ cautious capex strategy, asset utilisation rates have begun to improve. Hence, we expect charter rates to have bottomed out even in the absence of any upward trajectory at this juncture.
Others :
Hap Seng Plant: Due diligence on Kretam to be completed by 30 June UNRATED
QUICK TAKE
Plantation Sector: News flow for week 28 May – 1 June NEUTRAL
RETAIL RESEARCH
Stocks On Radar: N2N Connect, MyNews Holdings, Aeon Co, Pos Malaysia
ECONOMIC HIGHLIGHT
US: Strong labour, wage data cements June rate hike
NEWS HIGHLIGHTS
Pantech: Rides O&G recovery
CCM: Sees robust growth next year
Tatt Giap: Plans RM140mil project
CBIP: Sees flat earnings for 2018
DISCLAIMER:
The information and opinions in this report are prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.
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