PETALING JAYA: Hong Leong Investment Bank (HLIB) Research had advised investors to go for oil and gas (O&G) companies with high price volatility and earnings sensitivity to crude oil prices if the Brent oil price rally continues to gain strength.
According to the research house, SapuraKencana Petroleum (Bhd) has the highest earnings and share price sensitivity to crude oil price movements, making it the best proxy for trading on crude oil price rally.
Similarly, it noted that rig players like UMW Oil & Gas Corp Bhd (UMWOG) and Perisai Petroleum Teknologi Bhd are also good trading stock on oil price movement with a higher than average share price correlation.
Analyst Jason Tan Yat Teng said that typically, the impact of upstream service companies’ earnings would only be felt six to 12 months after big movement in the oil price due to time lead for project re-basing.
However, he realised that the overall stock price movement is highly correlated to the oil price, implying that stock prices always move ahead of corporate earnings in response to oil prices.
“SapuraKencana stands out as the best trading stock with the highest correlation among stocks covered and appears to be the best trading option to ride on the potential oil market recovery.
On the other hand, rig players (UMWOG and Perisai) also possess high correlation after Sapurakencana.
“Under the current volatile environment, we believe a more trading-oriented approach with focus on potential oil price movements should be favoured over long-term holding approach while emphasising on stocks with high correlation to the crude oil price,” Tan said.
HLIB Research maintained its neutral call on the sector while its top pick includes mid-to- small cap companies such KNM Group Bhd.
Im very much puzzle... 800,000 barrels of crude oil are missing everyday last year.... why would an over supply scenario cause the barrels missing everyday? There is not much of demand due to the glut.. this 800,000 barrels missing "everyday" contributed the main factor why the oil price fell.
Let me explain to those grandmas now quarter results just out... loss making... so this counter will stagnant for a while.. in coming quarter we will see profit coming in and that is when perisai going to rally..
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
stonenut2
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Posted by stonenut2 > 2016-03-10 13:05 | Report Abuse
Cindy cat Mari... meletup..