OSK overweight on oil industry

OSK Research Sdn Bhd has maintained its overweight position on the oil and gas (O&G) industry, given the growing signs of a global economic recovery and crude oil price stabilising at US$70-US$80 (RM239.40-RM273.60) per barrel.

Its top buy picks are Alam Maritim Resources Bhd with a target price of RM2.99 and Wah Seong Corp Bhd with target price of RM3.35.

"We believe their earnings sustainability is more promising compared with their peers," the report issued yesterday said.

Meanwhile, the research house is also positive on the news that Datuk Shamsul Azhar Abbas was appointed as the new Petroliam Nasional Bhd (Petronas) acting chairman, president and chief executive officer effective next Wednesday, replacing Tan Sri Mohd Hassan Marican.



"He (Shamsul) would be able to contribute positively to Petronas with his rich experience in all the segments of the O&G industry," OSK Research said.

The report said that the only uncertainty was his tenure of appointment and that it should not be any less than three years as oil field exploration, production and development was a long process that takes more than 10 years.

"Assuming that Shamsul manages to settle down by the first half of 2010, we would expect more new O&G contracts to come in by the second half of 2010, which should benefit our local O&G supporting companies in 2011," it added.

Since Shamsul is familiar with the upstream business, OSK expects that he could speed things up in this segment.