BIMB Securities said that it has a “Buy” recommendation for Reservoir Link Energy Berhad (RL) on its favourable prospects from well construction and Intervention services, and growth potential in both the O&G and RE space.
It is a good proxy for exposure in the emerging upstream decommissioning activities and solar RE construction projects. “We are optimistic that these segments could sustain its earnings in the long run,” it said
The stockbroking firm said that it values RL at RM0.52 based on relative peer valuation and SOP methodology which implies 13x FY23F P/E, offering 53% upside and therefore, a BUY call.
“We think it’s time to revisit the stock as the stock price has dropped below its IPO price of RM0.41,” it said
It said that it is like RL due to its rising position in the local upstream well services space which is typically dominated by foreign players such as Halliburton and Schlumberger.
BIMB Securities said that it opines that the rising requirement for local content by regulators would augur well for the company. “Besides that, RL can generate recurring income from well perforation and well leak repair services which are normally cushioned from the downturn in upstream capex spending,” the stockbroking firm said
The stockbroking firm believes that RL has a good growth prospect in the long term to be driven by new growth markets such as well decommissioning activities as well as solar RE projects. The steady stream of these jobs could future-proof its earnings in the long run.
