The upstream services players in the oil and gas (O&G) sector were expected to perform well in light of sustained activities due to the backing of the national oil company's capital expenditure (capex) allocation of RM50 billion to RM60 billion in 2024.

In a report released today, RHB said it still favoured the upstream service providers.

Among its top picks were Dayang Enterprise Holdings Bhd (with a 52-week target price of RM2.95), Dialog Group Bhd (RM2.79) and Yinson Holdings Bhd (RM3.06).

In the report, it noted that Petronas' profit after tax (excluding impairments) fell by 17% YoY to RM87 billion and that it paid a RM12 billion dividend to the Government in 4Q23, bringing FY23 payments to RM40 billion.

It said Petronas has approved a dividend of RM32 billion in FY24, payable over March-December. Its net cash position remained flat QoQ at RM108 billion, as of 4Q23.

On oil price, it noted that Petronas president/group CEO Tan Sri Tengku Muhammad Taufik Tengku Aziz had expected a correction in oil prices in 2024 amid prolonged uncertainty in the market as the Middle East conflict continues, with a projection of US$73/bbl in the near term and US$63/bbl in the long term.

"We have more bullish oil price assumptions of US$85/bbl and US$80/bbl for 2023-2024. Oil prices may rise in the near term if geopolitical tensions continue to escalate," it said.