KUALA LUMPUR: Affin Hwang Capital Research is turning more positive on the oil and gas sector as it believes the downside risk to both global oil prices and share prices has declined, reflecting a more attractive risk-reward profile for investors.It said on Wednesday this was achieved through prominent decisions by both Opec and non-Opec countries. While it expects oil to trade in the US$50 to US$55 range in 2017, this may be sufficient for oil majors to relook and raise their initial capex plans.“We expect contract flows and corporate earnings growth to show a gradual recovery. We downgraded MMHE to Hold from Buy; upgrade Petronas Chemicals and SapuraKencana to Hold from Sell; Bumi Armada and Petra Energy are upgraded to Buy from Hold.“We upgrade our sector view to Neutral (from Underweight), supported by both top-down and bottom-up analysis. The current outlook suggests downside risks to oil prices are looking more benign and, due to higher oil prices, we believe Malaysia sector contract flow could start to improve in 2017 as oil majors revisit capex plans.“Taking that into consideration, we have also taken a bottom-up approach in selecting stocks and recommend those with low short-term liquidity risk (after conducting cash-flow analysis) and good growth catalysts that could outperform peers. In the large-cap space, we like Bumi Armada (TP: 76 sen) as our top pick, while Petra Energy (TP: RM1.09) is our small-cap top pick,” it said.

Source: The Star February 08, 2017 02:26 UTC