Stock Name: KENCANA
Company Name: KENCANA PETROLEUM BHD
Research House: OSK



Kencana Petroleum Bhd is expected to land some new contracts soon given the improving sentiment in the local oil and gas (O&G) industry, said OSK Research.

In its research note today, OSK said the contracts may include fabrication and hook-up and commissioning jobs.

OSK said with crude oil price stabilising at close to a one-year high since the fourth quarter of 2009 of US$70-US$80 a barrel, Petroliam Nasional Bhd and its production-sharing contractors would commence major capital expenditure.

"Also, since the O&G sector has been quiet over the past two years, any new contracts would start with fabrication and cascade down to other support services such as support vessels, pipe laying and so on," it said.

It said it was upbeat Kencana should be receiving new contracts anytime soon.

The research house has maintained its ''buy'' call on the company and raised the target price to RM2.57.

"The higher valuation was based on expectation that the listing of Malaysia Marine and Heavy Engineering Holdings Bhd has started the ball rolling for a re-rating of most of the share prices of O&G stocks," it said. -- Bernama