Perdana Petroleum, Dayang among biggest winners for 1Q24 contract awards

KUCHING (June 14): AmInvestment Bank Bhd (AmInvestment Bank) peg a couple of Sarawakian companies like Dayang Enterprise Holdings Bhd (Dayang) and Perdana Petroleum Bhd (Perdana) as the biggest winners for oil and gas (O&G) contract awards for the first quarter of 2024 (1Q24).

In its quarterly tracking, the research firm found that contract awards were still dominated by one-year work order extensions for local listed Malaysian oil and gas companies.

“We gather that this is due to the backlog of maintenance works attached to the Pan-Malaysia maintenance, construction, and modification (MCM) contracts signed in 2019,” it said in a sector review today.

It added that these contracts were structured on a call-out basis.

“We expect contract flows to be quieter in 2Q24 as most of the works have been extended until end-2024.”

Recall that Petronas’ target to spend RM300 billion of capex in the next five years which translates into an annual capex of RM60 billion, which implies a vigorous pipeline of projects to be dished out.

AmInvestment Bank added that prospects for the offshore equipment and service providers, including FPSO players, are resilient, supported by strong momentum in offshore developments and activities.

In addition, as highlighted in Petronas Activity Outlook 2023-2025, rig operators such as Velesto as well as platform fabricators such as Malaysia Marine and Heavy Engineering and Sapura Energy are anticipated to benefit from rising upstream activities in the next three years.

“Companies in our coverage delivered a balanced performance during the 1Q24 earnings season with 63 per cent of the companies coming in within our expectations.

These were Bumi Armada Bhd, Deleum Bhd, Dialog Group Bhd, Petronas Gas Bhd and Yinson Holdings Bhd.

Slightly encouraging sequential earnings for the sector, a sign of recovery from a low base. 1Q2024 core net profit (CNP) rose by 11 per cent quarter on quarter to RM2.5 billion, despite a flattish topline as Petronas Chemicals nearly doubled its earnings from a low base.

Recall that the company experienced a double whammy from 2Q to 4Q23 due to multiple unscheduled plant shutdowns and weak petrochemical product prices.

“We understand that the planned plant shutdowns for 2024 are within expectations for now and also, product prices in the olefin and derivative (O&D) and specialty chemicals segments are envisaged to be stronger this year.”

-ANT

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