Feb 5, 2013

Go Long on Oil & Gas Cyclical Sectors

Locally, last Friday’s news that Petronas has aborted the award of Risk Sharing Contract for the Tembikai and Chenang clusters and will not be reopening them for bidding is a wet blanket for oil and gas (O&G) players, especially Scomi Group that had expressed interest in these clusters. Nonetheless, it could be a blessingin disguise for the group as the timing of Petronas’ announcement is perfect ahead of its EGM  this week to obtain shareholders’ approval for its restructuring exercise involving Scomi Marine, its subsidiaries and the group. Earlier news reports and market talks have indicated that some new shareholders of
the group are not happy about the possibility of the RSC contract to be parked directly under Scomi Marine and not the group.

That aside, O&G is an important cyclical sector that investors should overweight this year, apart from the underperforming construction and property sectors, as no matter who wins the election these key sectors are imperative to derive domestic activities.

by TA securities