Renaissance Services of Oman offers a "unique" way for investors to profit from spending in the oil and gas sector, Deutsche Bank said in a note to investors yesterday.
The Middle East and North Africa (Mena) was likely to see one of the highest growth rates globally in upstream capital expenditure programmes, from which Renaissance stood to benefit, Deutsche Bank said. So-called capex programmes, or money spent on acquisitions and upgrades of equipment, property or industrial buildings, had been one of the more resilient in the Middle East, the bank said.
Shares in Renaissance, which provides services to the oil and gas sector, rose the most in more than three weeks as Deutsche Bank initiated coverage of the stock with a "buy" recommendation.
Deutsche Bank assigned a price estimate of 1.3 rials to the stock and said Renaissance was "well positioned geographically" to offer a "strong sustainable growth profile".
The stock closed up 4.3 per cent yesterday at 1.0458 rials per share on the Muscat Index as it appeared to shrug off the fallout from the cancellation last month of the floatation of Topaz Energy & Marine, its oilfield services business in Dubai.
The Mena region holds 60 per cent of global oil and 45 per cent of global gas reserves, and accounts for 36 per cent and 20 per cent of the global oil and gas production, respectively. Renaissance has the world's fourth-largest fleet of offshore support vessels, or OSVs, with a 50 per cent and 15 per cent share of the OSV market in the Caspian and Mena region, respectively. The company plans to invest up to US$1.3 billion over the next three years to add about 55 vessels to its existing fleet of more than 100 OSVs.
The company is also building a presence in Brazil, which is expected to become the largest deepwater capex programme in coming years, according to Deutsche Bank. Although Renaissance is "on par and/or superior to [its] international oil and gas services peers", the stock sells at a "significant 50 per cent-plus discount", Deutsche Bank said in its note.