Long Term: Over Weight
The state of Pahang welcomes its first oil discovery which could increase Petronas’s annual production by at least 2.7%. It may not be substantial but every drop counts as the national oil company pursues sector-wide opportunities to reverse Malaysia’s production decline. We continue to have positive expectations for the oil & gas sector and maintain our Overweight call. Petronas’s 5-year RM300bn capex should keep the excitement level high in a sector that is a major revenue earner. Our top picks are SapuraKencana for big caps and Perisai for small caps.