OIL and gas stocks, the key beneficiary of projects recently announced by the government under its Economic Transformation Programme (ETP), are in for a solid year, analysts said.
The industry will see at least RM20.1 billion worth of investments pour in on three projects that were unveiled on Tuesday.
Maybank Investment Bank Research (MIB), which kept its "overweight" stance on the industry, said the projects would mean growth and opportunities for local service providers.
It sees Malaysia Marine & Heavy Engineering Bhd (MHB) as a key beneficiary with a target price of RM6.50, along with Dialog Group Bhd (RM2.60), KNM Group Bhd (RM4.35) and Kencana Petroleum Bhd (RM3.10).
All oil and gas stocks posted gains in the stock market yesterday, with SapuraCrest Petroleum Bhd rising to an all-time high.
"Newsflow will remain strong over the near term. We foresee a re-rating in valuations on some stocks when the marginal field projects are announced next," MIB said in its report on the sector yesterday.
It also has a "buy" on Petronas Gas Bhd (PetGas) and SapuraCrest, which rose by 33 sen or 9.6 per cent to close at RM3.78 yesterday.
MIB said the stock has potential upside target areas of between RM3.85 and RM4.05.
The three ETP projects are ExxonMobil's joint RM10 billion investment with Petronas Carigali Sdn Bhd in new oil and gas assets; Shell Malaysia's RM5.1 billion investments in upstream, midstream and downstream facilities; and Dialog's RM5 billion deepwater terminal project in Pengerang, Johor, as part of a consortium.
The three ETP projects, though not entirely new, having been highlighted in the media before, simply confirm oil majors' increased exploration and production spending in Malaysian waters and the kickstart of Dialog's project, MIB said.
"We expect to see more announcements on the ETP, but the market will likely be looking out specifically for projects related to the Greater KL and oil, gas and energy (areas)," said RHB Research, which is also positive on the oil and gas sector.
HwangDBS Vickers Research said its top picks for the sector in 2011 are KNM, which rose by 15 sen to RM3.17, and Dayang Enterprise Bhd, which gained 9 sen to RM3.08.
MHB rose by 19 sen to RM6.41, PetGas added 4 sen to RM11.24, Dialog was up 5 sen to RM2.21 and Kencana, up 13 sen to RM2.86. Petronas Chemicals Group Bhd rose by 4 sen to RM6.02.