SECTOR FOCUS OF THE DAY
Oil & Gas Sector: Stabilising oil prices offer earnings visibility OVERWEIGHT
We maintain our 2018-2019 Brent crude oil projection at US$70-75/barrel vs. the EIA’s US$71/barrel for 2018 and a lower US$66/barrel for 2019, dampened by a projected 11% YoY increase in US daily production to11.9mil barrels. As a comparison, Petronas’ 2018 internal crude oil assumption is maintained at only US$52/barrel for project feasibility studies.
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 while Saudi Aramco’s listing remains in the pipeline.
Our top picks are still companies with stable and recurring earnings such as Dialog Group and Yinson. Dialog’s earnings visibility is secured largely by the Pengerang Deepwater Terminal project while Yinson’s Ghana FPSO vessel project will provide the earnings momentum over the next 2 years. Our other BUYs are MMHE, Sapura Energy and Bumi Armada, which are trading below their intrinsic values. We maintain a SELL for Petronas Gas due to the Energy Commission’s upcoming announcement of the transportation tariff setting mechanism, which we expect to be value-eroding due to an expected lower targeted rate of return on asset values.
Others:
Kimlun Corp: Flat top line and profits in FY18 BUY
Titijaya Land: Slew of new launches BUY
QUICK TAKE
Plantation Sector: News flow for week 18 – 22 June NEUTRAL
RETAIL RESEARCH
Stocks On Radar: CCM Duopharma Biotech, Mega First, Econpile, Petra Energy
ECONOMIC HIGHLIGHT
Japan: Inflation expected to rise gradually
NEWS HIGHLIGHTS
Sasbadi: Education products still relevant, says MD
PIE Industrial: Embarks on biggest expansion plan
IPO: Aquawalk targets to list in two years
Ann Joo Resources: Looks abroad to tackle slumping domestic demand
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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