There are at least two recovery phases for the sector, with the first dependent on oil price sentiment and the second on earnings expectations. Sector valuations had surged ahead of oil prices which are expected to be rangebound at <US$60/bbl. Further upside must be supported by consistent earnings reratings. Bumi Armada and Yinson Holdings are candidates for meaningful earnings upgrades. Valuations for MISC and Sapura Energy appear lofty, given the lack of earnings support. Maintain MARKET WEIGHT.
Source: UOB Kay Hian Research - 14 Apr 2017
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