Light At The End Of The Tunnel?

More volatility ahead for O&G companies

Malaysia’s biggest O&G player, Sapurakencana Petroleum (“SKPetro”) recently reported its 2nd quarter result (for financial period ending 31 July 2016) on 28 September 2016. The results indicate that there will be more volatility in operating results of operating companies:

We saw a significant drop in revenue. Nevertheless, the operating income was boosted by  a non-recurring operating income recorded for the latest quarter:

fs_1

The non-recurring operating income was due to payment received from Petronas for the cessation of its RSC contract, as explained below:

fs_2

Prospects remain challenging. However, Management expect the Company to be able to navigate the year satisfactorily.fs_3

Technically speaking, SKPetro appears to be on a bearish mode:

  • The stock does not appear to be able to break its downtrend mode

skpetro28092016_1skpetro28092016_2

  • Other technical indicators e.g RSI and MACD seem to support an overall bearish tone

skpetro28092016_3

  • To be able to successfully break the downtrend, the share price and / or its shorter tenure MAs should breach the 200D-MA line, with a strong volume support.

skpetro28092016_4

Nevertheless, we may see some support at RM1.28 for potential rebound.

Recent weakness may have been attributable to the on-going disposals by major institutional investor such as EPF:

SKPetro_Disposals.png

In terms of analysts’ target price, it is quite wide (ranging from RM1.16 to RM1.71, with Hold / Sell recommendations):

PriceTarget_SKPetro.png

What is very clear at this juncture is that we are yet to see the light at the end of tunnel for O&G companies. We should brace for more volatility ahead.

DISCLAIMER: THIS IS A PERSONAL BLOG AND SHALL NOT BE RELIED IN WHATSOEVER MANNER BY ANYONE. ALL ARTICLES CONTAINED IN THIS SITE ARE FOR INFORMATION AND ILLUSTRATIVE PURPOSES ONLY AND DOES NOT PURPORT TO SHOW ACTUAL RESULTS. IT IS NOT, AND SHOULD NOT BE REGARDED AS INVESTMENT ADVICE OR AS A RECOMMENDATION REGARDING ANY PARTICULAR SECURITY OR COURSE OF ACTION. SOURCES USED IN THIS SITE HAVE NOT BEEN INDEPENDENTLY VERIFIED FOR ACCURACY, COMPLETENESS AND TIMELINESS. YOU SHOULD SEEK INDEPENDENT AND PROFESSIONAL INVESTMENT ADVICE IN REGARD TO YOUR INVESTMENT DECISIONS. THE AUTHOR MAY HOLD POSITIONS IN THE SECURITIES OR RELATED INSTRUMENTS MENTIONED ABOVE.

Author: Ken Utau

Markets Observer + Food Lover

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