AmInvestment Bank has maintained its sell calls for Bumi Armada Bhd, Sapura Energy Bhd and Velesto Energy Bhd amid low oil prices and earnings of upstream services companies.
According to AmInvestment analyst Alex Goh, the research house viewed the headwinds for the sector to be worse than the previous 2015-2017 downcycle that led to multiple financial distress for oil and gas companies (O&G).
Therefore, “we retain our sell calls for Bumi Armada, Sapura Energy and Velesto Energy,” he said.
Overall, he is neutral on the O&G sector given “our mixed number of buy and sell calls.”
Dialog Group Bhd and Serba Dinamik Holdings are buys due to “their resilient non-cyclical tank terminal and maintenance-based operations.” Petronas Chemicals Group Bhd, on the other hand, had a “high correlation” to the recent oil price upturn, he said.
Brent crude oil prices have averaged US$41/barrel year-to-date while current spot prices had recovered to US$42/barrel from the year-low of US$14/barrel on April 22.
“Even though US crude oil inventories have risen near the recent all-time high to 539 million barrels, we maintain our crude oil price forecast at US$40-US$45/barrel for 2020 and US$45–US$50/barrel for 2021,” Goh said. – July 14, 2020
