OSK Research Sdn Bhd, which has selected Kencana Petroleum Bhd as its top pick in the oil and gas sector, has maintained the target price for the stock at RM2.06.

The target price was based on price to earnings ratio of 16 times earnings per share for the financial year 2011, the research house said in a statement today.

'We believe there is a potential share price re-rating on the stock in the event if Malaysia Marine and Heavy Engineering Holdings Bhd is listed at a high price earning valuation since both companies have a good track record in their fabrication business,' it said.

MISC Bhd's subsidiary, Malaysia Marine and Heavy Engineering Holdings, is expected to be listed end-October with an indicative initial public offering price of RM3.80 per share.

The research house said Kencana Petroleum's current orderbook still remained high at RM1.6 billion following some small job replenishment during the quarter. - BERNAMA