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:
The non-recurring operating income was due to payment received from Petronas for the cessation of its RSC contract, as explained below:
Prospects remain challenging. However, Management expect the Company to be able to navigate the year satisfactorily.
Technically speaking, SKPetro appears to be on a bearish mode:
- The stock does not appear to be able to break its downtrend mode
- Other technical indicators e.g RSI and MACD seem to support an overall bearish tone
- 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.
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:
In terms of analysts’ target price, it is quite wide (ranging from RM1.16 to RM1.71, with Hold / Sell recommendations):
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.
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