Overview

The Petronas Activity Outlook (PAO) 2025-2027 provides a detailed roadmap for Malaysia’s Oil & Gas sector. Although published later than usual, the report sheds light on regional activity outlooks, plant turnaround plans, and exploration trends. With strategic insights, this report identifies winners, risks, and critical periods for execution. Here’s a deep dive into the listed companies covered in the report and their respective financial outlooks.

Yinson Holdings (Ticker: YNS MK)

Recommendation: BUY

Target Price: RM3.75

Current Price: RM2.37

Market Cap: RM7,298.0m

Yinson Holdings is the top pick in the Oil & Gas sector. The company boasts strong financials with a forecasted price-to-earnings (PE) ratio of 13.6x for 2025 and 10.7x for 2026. Its price-to-book (PB) ratio stands at 2.0x for 2025, reflecting robust valuations. Yinson’s return on equity (ROE) is expected to improve from 10.4% in 2025 to 12.8% in 2026, highlighting its operational efficiency and profitability. The company’s ability to deliver earnings agility makes it a standout performer in the sector.

Dialog Group (Ticker: DLG MK)

Recommendation: BUY

Target Price: RM3.00

Current Price: RM1.89

Market Cap: RM10,671.0m

Dialog Group is a key player in plant turnarounds and downstream activities. With an anticipated PE of 20.4x for 2025 and 18.7x for 2026, Dialog is positioned as a steady performer. The PB ratio of 2.0x and ROE of 10.2% in 2025 further underline its financial stability. Dialog’s expanded pipeline network and facilities improvement plans align with Petronas’ production goals, reinforcing its resilience in the maintenance value chain.

Bumi Armada (Ticker: BAB MK)

Recommendation: HOLD

Target Price: RM0.65

Current Price: RM0.66

Market Cap: RM3,912.0m

Bumi Armada benefits from merger rumors with MISC, which have supported its valuation. With a PE ratio of 4.9x for 2025 and 3.8x for 2026, the company remains attractively valued. Its PB ratio is stable at 0.5x, with an ROE of 11.3% in 2025, improving to 13.1% in 2026. Despite a solid earnings outlook, the HOLD recommendation reflects limited upside potential in the near term.

Deleum (Ticker: DLUM MK)

Recommendation: BUY

Target Price: RM1.70

Current Price: RM1.37

Market Cap: RM550.0m

Deleum is a significant beneficiary of gas turbine maintenance, a segment projected to grow exponentially. The forecast for engine change-outs is set to increase to 45 units in 2025, 47 in 2026, and 53 in 2027. Deleum’s PE ratio of 8.7x for 2025 and 8.2x for 2026 underscores its attractiveness. The company’s focus on maintenance-centric activities aligns with Petronas’ long-term production strategy, making it a strong buy.

MISC (Ticker: MISC MK)

Recommendation: BUY

Target Price: RM9.55

Current Price: RM7.20

Market Cap: RM32,139.0m

MISC remains a leader in maritime and gas logistics. With a PE ratio of 13.9x for 2025 and 13.6x for 2026, the company offers consistent value. Its PB ratio of 0.8x reflects robust asset backing, while interest coverage remains strong at 33.5x for 2025. MISC’s stable ROE of 6.0% across 2025 and 2026 further highlights its resilience.

Uzma (Ticker: UZMA MK)

Recommendation: BUY

Target Price: RM1.08

Current Price: RM0.73

Market Cap: RM322.0m

Uzma is well-positioned in production chemicals and decommissioning services. With a PE ratio of 7.3x for 2025 and 6.2x for 2026, Uzma represents a compelling investment. The company’s ROE is set to improve from 7.5% in 2025 to 8.5% in 2026, driven by increasing demand for its services. Its alignment with Petronas’ decommissioning plans makes it a reliable player in the sector.

Velesto Energy (Ticker: VEB MK)

Recommendation: HOLD

Target Price: RM0.17

Current Price: RM0.19

Market Cap: RM1,520.0m

Velesto Energy faces challenges due to downgrades in jack-up (JU) rig demand for 2025 and 2026. Despite this, its PE ratio of 33.0x for 2025 drops significantly to 11.7x for 2026, reflecting a recovery potential. The ROE is expected to improve from 3.1% in 2025 to 7.9% in 2026. The HOLD recommendation reflects market uncertainties but acknowledges Velesto’s role in decommissioning services.

Sapura Energy (Ticker: SAPE MK)

Recommendation: BUY

Target Price: RM0.07

Current Price: RM0.04

Market Cap: RM643.0m

Sapura Energy grapples with financial challenges but remains a key player in tender rig operations. Despite negative PE ratios for 2025 and 2026, the company continues to deliver value in specialized rig operations. Sapura’s strategic focus on cost optimization and tender rig contracts aligns with Petronas’ drilling requirements.

Conclusion

The UOB Kay Hian report highlights a mixed outlook for Malaysia’s Oil & Gas sector. While certain companies like Yinson and Dialog stand out as strong buys, others such as Velesto and Bumi Armada face challenges. Maintenance-focused players like Deleum and Uzma align with the robust plant turnaround and decommissioning outlook, making them attractive investments. The sector’s resilience amid geopolitical and ESG challenges underscores its potential for long-term growth.