Kencana Petroleum Bhd is poised to ride on an up-cycle in new domestic oil and gas contract rollouts coupled with the listing of MISC Bhd's Malaysia Marine & Heavy Engineering Bhd (MHB).
In a report today, AmResearch Sdn Bhd said since the beginning of the year, Kencana has secured a total of RM681 million in new contracts, with a outstanding order book at RM1.6 billion.
"Based on our estimates, we expect Petroliam Nasional Bhd to award up to RM10 billion new contracts over the next six months."
Yesterday, Kencana secured a contract for the provision of single buoy mooring overhaul from Petronas Carigali for its Sarawak operations.
The one-off RM16.4 million contract is expected to commence by Jan 2011.
AmResearch said the government also planned to groom local fabricators to be able to effectively compete regional.
"This could mean that merger and acquisition could resurface for the company, further catalysing a re-rating on the stock," it said.
The research house said it would maintain a "buy" call on the ompany with an unchanged fair value of RM2 per share.
Meanwhile, OSK Research said it would also maintain its "buy" call on the company with a higher target price at RM2.06.
"Currently, the stock remains our top pick for the oil and gas sector as we like its strong delivery track record as well as strong orderbook and tenderbook, which total RM1.6 billion and RM2 billion respectively," it said. -- Bernama
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