The current valuation run-up follows the oil price rally, due to global market rebalancing (ie potential extension of production cuts) and weather/geopolitical events. This appears similar to the previous rally in early-17; however earnings continued to disappoint. We maintain our sector theme of setting take-profit levels if the stock valuation is not supported by earnings rerating. Certain stocks that have room for earnings upgrades include Bumi Armada, Dialog and Serba Dinamik.

Source: UOB Kay Hian Research - 29 Sept 2017