Wednesday, June 8, 2011

CIMB Research maintains Overweight on oil and gas sector

KUALA LUMPUR: CIMB Equities Research is maintaining its Overweight stance on the oil and gas sector.

It said on Wednesday, June 8'' that higher oil prices and steady demand growth have helped the sector's capex to stage a welcome recovery.

'Global upstream capex could hit a new high of US$410 billion this year. Petronas's five-year capex target is RM250 billion, translating into annual capex of RM50 billion, which would be a new record,' it said.

CIMB Research said separately, the recently concluded 1Q11 reporting season saw the sector's best performance since 4Q08 when it started its quarterly reviews.

'For the first time, all stocks met or beat our expectations. We remain OVERWEIGHT on the sector and maintain all our stock recommendations, earnings forecasts and target prices.

'Economic Transformation Programme newsflow is a potential rerating catalyst for the sector, along with more contract awards. SapuraCrest stays as our top pick,' it said.

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