UOB Kay Hian Report – October 30, 2024

Malaysia: Advancements in Oil & Gas and Strategic Telecom Growth

Oil & Gas Sector: Cost-Efficiency and Collaboration in a New Era

The Malaysian oil and gas sector is experiencing a transformative phase with the launch of Petronas’s Integrated Well Services Contract (IWCS). This new model, a restructured version of the Integrated Well Services (IWS), emphasizes industry-wide collaboration to drive cost efficiencies and enhance operational effectiveness. Petronas’s IWCS contract signifies a strategic shift toward industry collaboration, aiming to reduce redundancy and streamline processes within Malaysia’s oil and gas ecosystem.

The IWCS’s emphasis on cross-company partnerships is expected to optimize resource utilization across the sector, enhancing Malaysia’s competitiveness in the regional energy market. With this new contract structure, companies operating within Malaysia’s oil and gas industry are well-positioned to benefit from improved margins and sustainable growth, as they work toward achieving greater efficiency.

Axiata Group Berhad: Focused Financial Discipline and Growth Potential

Axiata Group Berhad (AXIATA MK), a leading telecommunications conglomerate, is strengthening its financial position with a clear focus on cash flow and balance sheet discipline. In the latest update, Axiata has demonstrated resilience, capitalizing on a favorable low-interest-rate environment to enhance shareholder value and drive sustainable returns.

Axiata’s financial strategy aims to optimize cash flow, enabling the company to reinvest in core areas while maintaining a balanced approach to debt management. This financial prudence positions Axiata as a forward-thinking player in Malaysia’s telecom sector, poised to capitalize on industry growth while safeguarding financial health. With a “BUY” rating, Axiata is projected to see near-term gains from its disciplined fiscal approach, aligned with anticipated market opportunities in the digital and telecom spaces, and is set at a target price of RM2.90.

End of Report