SapuraKencana Petroleum Bhd, Malaysia's second-largest oil and gas services provider, fell on its Kuala Lumpur debut, a day after Asian stocks slumped the most this year amid mounting concern over international fallout from Europe's debt crisis.

The stock dropped 6.3 per cent to RM2.10 from its reference price of RM2.24 at the close, compared with a 0.5 per cent gain in the benchmark FTSE Bursa Malaysia KLCI Index. It was the most active stock with 206 million shares traded. The MSCI Asia Pacific Index slid 2.5 per cent yesterday as Greece's move to call new elections increased concern it will leave the euro and derail efforts to contain the region's financial problems.

"For the past week, market sentiment hasn't been that good basically due to the worries on the Europe side," Teh Kian Yeong, an analyst at KandN Kenanga Holdings Bhd, said by phone in Kuala Lumpur today. "This is a stock we actually like. After the merger, their earnings growth is stronger and their balance sheet is stronger as well."

The Kuala Lumpur-based group was formed through the RM11.9 billion merger between SapuraCrest Petroleum Bhd and Kencana Petroleum Bhd Before the merger, the companies won rights to jointly develop their first oilfield off Malaysia's eastern coast with Petrofac Ltd. By joining forces, they want to bid for larger contracts and further expand into exploration.

This comes after Malaysia said it would offer tax incentives to encourage the development of unviable marginal oil and gas fields to boost the Southeast Asian nation's energy reserves.

With a market value of RM10.5 billion, SapuraKencana is now Malaysia's second-biggest listed oil and gas services provider after Bumi Armada Bhd.

Kenanga rates SapuraKencana outperform with a price estimate of RM2.63, according to data compiled by Bloomberg. This means the stock's total return is expected to exceed 10 per cent over 12 months, Teh said.

SapuraKencana, which has an order book of RM13.5 billion, is bidding for RM7 billion of contracts overseas and at home, Group Chief Executive Officer Shahril Shamsuddin said yesterday. It has allocated US$1.5 billion for capital expenditure over three years for new drilling rigs and pipe-laying vessels, he said. -- Bloomberg