KUALA LUMPUR (Aug 26): Energy stocks rose on Monday and led gainers on Bursa Malaysia as oil prices gained amid renewed Middle East tensions.
Bursa Malaysia's Energy index, which tracks 22 oil and gas-related companies, climbed as much as 2% before pausing for noon trading break with a 0.9% increase to 929.89 points. Brent — the global benchmark for crude oil — climbed above US$79 (RM343.29) a barrel.
“The Israel-Hamas war has not impacted production materially, but recent escalations have increased the risk of supply disruptions,” said analysts from Australia & New Zealand Banking Group. “We expect this to underpin volatility in oil prices.”
Oil is now up 3.3% year-to-date after a volatile 2024.
Israel has declared a state of emergency after launching a pre-emptive strike on Hezbollah missile sites in Lebanon in anticipation of a response to last month’s assassination of its military chief. Hezbollah has also fired rockets and drones at Israel.
Analysts have also been raising forecasts and target prices for several key stocks in the sector thanks to better-than-expected quarterly results. Oil has been volatile so far this year and is now up 3.26% year-to-date.
Deleum Bhd (KL:DELEUM) was the best gainer in the sector, up 5.97% or eight sen to RM1.42, giving it a market capitalisation of RM570.2 million. Analysts have raised target prices for the stock after better-than-expected earnings, with the average now at RM1.56 versus RM1.51 a month ago.
Offshore support vessel counters were top gainers too, with Icon Offshore Bhd (KL:ICON) up 5.61% or six sen to RM1.09, while Perdana Petroleum Bhd (KL:PERDANA) was up 2.74% or one sen to 37.5 sen and its major shareholder Dayang Enterprise Holdings Bhd (KL:DAYANG) was up 1.98% or five sen to RM2.54.
The target prices for Dayang, in particular, were also lifted after the company’s second-quarter earnings more than doubled year-on-year and beat market expectations. The average target price rose to RM3.82 from RM3.45 a month ago.
Other top moving stocks include services and equipment companies such as Uzma Bhd (KL:UZMA), up 2.51%, Coastal Contracts Bhd (KL:COASTAL), up 2.29%, T7 Global Bhd (KL:T7GLOBAL), up 2.25%, and Yinson Holdings Bhd (KL:YINSON), up 1.88%.
Gains, however, have been capped by concerns over the potential decline in capital expenditure of national petroleum company Petroliam Nasional Bhd, or Petronas, following the takeover of all natural gas trading activities in Sarawak by state-owned Petroleum Sarawak Bhd.
Both CGS International and AmInvestment Bank believed that greenfield-related services contractors such as jack-up rigs owner Velesto Energy Bhd (KL:VELESTO) would be most affected.
Still, brownfield maintenance contractors will continue to benefit from the move as Petronas will likely maintain its long-term production target of two million barrels of oil equivalent production per day to ensure Malaysia’s energy security, said AmInvestment.
Offshore support vessel operators will remain fairly sheltered given the significant gap in supply and demand dynamics, which has translated into current daily chartered rates reaching close to its peaks, the research house noted.
Maintenance, meanwhile, would be the last to face spending cuts by Petronas, making Dayang more resilient than its peers in the sector, according to CGS International.