• Business profile: PENERGY's principal activities are: 1) Provision of integrated services for brownfield maintenance and engineering; 2) Onshore civil engineering services; 3) Marine offshore support services; 4) Design, fabrication, supply and installation services, and 5) Development & production of small field risk service contract.
• PENERGY and partners close to secure PM9 job? PENERGY’s s hare price jumped 4.7% yesterday on high volume (4.7x and 7.9x higher than 1-month and 3- month average daily volume, respectively), tracking strong relief rally in oil prices and the Edge Weekly’s report that a tripartite partnership between Talisman Energy, Coastal Energy and Petra Energy is understood to be close to winning an enhanced oil recovery (EOR) contract for both oil and gas reserves from Petronas for the PM9 oilfield off the coast of Terengganu.
• Opportunity in market selldown with Bloomberg target price at RM1.83 or 36% upside. PENERGY prices corrected 59% from a 52-week high of RM3.16 (mid June 2014) to a low of RM1.29 (intraday low on 30 Jan) before ending at RM1.35 on 4 Feb. At RM1.35, PENERGY is trading at 0.86x P/B, relatively undemanding against local peers such as DAYANG (3x) and BARAKAH (1.8x).
• Likely to play catch-up. Hence, we believe current price weakness presents good buying opportunity as daily and weekly charts are flashing oversold readings coupled with signs of bottomign out. In terms of rebound, near term upside targets are RM1.42 (intraday high 4 Feb) and RM1.53 (20-d SMA). A decisive breakout above RM1.53 will spur prices to our long term target prices at RM1.73 (23.6% FR).
• Immediate supports are RM1.29 and RM1.25. Cut loss below RM1.20.

Source: Hong Leong Investment Bank Research - 5 Feb 2015