PETALING JAYA: While the broader market and the energy index staged a technical rebound today after a steep fall on Monday, some heavily sold oil & gas (O&G) stocks remained in negative territory as investors remain wary about the sector’s outlook.
Dayang Enterprise Holdings Bhd, Wah Seong Corp Bhd, Carimin Petroleum Bhd and Petra Energy Bhd, which hit limit-down on Monday, continued to face selling pressure, with their share prices skidding 13.2%, 7%, 6.4% and 0.6% to RM1.32, 73 sen, 65.5 sen and 79 sen, respectively.
O&G stocks remained the top actives on the local bourse today, including Sapura Energy Bhd, Bumi Armada Bhd and Velesto Energy Bhd.
The FBM KLCI opened 8.3 points lower at 1,415.86 points and sank to an intraday low of 1414.95 before rebounding as much as 22.57 points or 1.6% to 1,446.73 points. The key index closed 6.31 points or 0.44% higher at 1,430.47 points.
The energy index gained 15.39 points or 2% to 770.34 points, while the technology index saw the biggest rebound of 1.14 points or 3.4% to 34.35 points.
There were 491 gainers against 477 losers on the local bourse, with turnover of 4.42 billion shares worth RM3.21 billion.
Almost all regional stock markets ended higher today, with China, Hong Kong, Indonesia and Singapore registering gains of over 1%.
However, the ringgit continued to weaken against the US dollar, by 0.5% to 4.2325 from 4.2130 on Monday.
Meanwhile, oil prices rebounded by about 8% on global stmulus hopes and Russia’s hint that its doors remain open to cooperation with Opec.
In a research note, Kenanga Research said the four O&G components of the FBM KLCI – Dialog Group Bhd, Petronas Dagangan Bhd, Petronas Chemicals Group Bhd (PetChem) and MISC Bhd – together make up 11% by weight and 8% by earnings.
“Of these four, we cut PetChem (the largest component at 4.2% by weight) target price by 29% to RM4.50 as we lower FY20/21 earnings per share by 43.5%/32.6% to 23.6/32.1 sen on account of lower average selling prices assumptions.”
It is maintaining a neutral call on the sector amid the heavy sell-off, but with no preferred stock picks, as it sees this disruption may lead to a sector-wide derating.
“Nonetheless, we have retained outperform calls on proven resilient names (Yinson, Serba Dinamik, Dialog, MISC), although we recommend investors to avoid the sector entirely for the time being, until uncertainties are cleared.”
The research house advised a bottoms-up approach to stock picks, preferring names with relatively resilient earnings nature and ability to deliver earnings growth despite harsh macro environment. These would include Dialog, Serba Dinamik and Yinson.
It said MISC deserves a special mention, as its stable dividends could provide some defensiveness amid the uncertainty.
“Meanwhile, bargain hunters could keep a watchful eye on overly bashed-down stocks, and reconsider their positions when there are signs of a turnaround. These would include Bumi Armada and Sapura Energy, as these names are current