|Oil price winner|
- BUY Entry – 0.09 Target – 0.12 Stop Loss – 0.08
- MMT is a Thailand-based but SGX-listed company that provides drilling and sub-sea engineering services for the offshore & marine industry.
The company’s subsea engineering segment services clients mainly in Southeast Asia and the Middle East. MMT is a 58% owned subsidiary of Thailand-listed Thorsen Thai Agencies.
- Dismal performance from 2014-2020. MMT’s share price has significantly underperformed the broader market since 2014 when oil prices collapsed due to oversupply from US shale production.
This underperformance is not specific to MMT but cuts through the whole O&G sector, as investors have severely underweighted exposure to the sector.
- Oil’s on a roll. Ironically, the global push towards renewables is helping to lift oil prices higher.
The decline in capex to replenish depleting oil wells, combined with massive stimulus policies to prop up the global economy, are creating a favourable environment for oil prices going into 2022.
WTI crude futures are now trading above US$80 a barrel, the highest since 2014.
The contracts consist of subsea construction, IRM, subsea wellhead cutting and removal in Thailand and Survey in Angola and multiple Cable Lay scopes and Sat Diving interventions with long standing clients in Saudi Arabia.
We expect the company to win more such contracts on the back of the favourable oil price environment.