Kencana Petroleum Bhd remains a top pick for OSK Research in the oil and gas sector due to its delivery track record.
The research house has maintained a trading "buy" for Kencana with the target unchanged at RM3.05.
"We believe another re-rating of its share price will happen
sometime in the fourth quarter of this year, when there is more guidance from management on the potential contribution from the Berantai marginal field," said OSK Research said in its research note today.
Yesterday, the company announced that its 100 per cent owned subsidiary, Kencana HL SB, has secured a contract from Kebabangan Petroleum Operating Company SB for the fabrication of Kebabangan substructure for Kebabangan Northern Hub Development Project.
"We had expected Kencana to win at least a portion of it given the company’s delivery track record and available yard space.
"We understand that Kencana’s utilisation rate had recently
increased to about 60 per cent but there is still ample room to take on more jobs," OSK Research added.
OSK Research said Kencana's order book should increase to about RM2.4 billion and this is expected to keep the company busy for the next two years. Meanwhile, Kencana’s tender book was about RM5.0 billion. -- Bernama