Brokers' take

Oil-and-Gas | Neutral

OCBC Investment Research, Nov 30

2016 saw a gathering of momentum in debt restructuring and company defaults in the sector. Currently, many companies are now trading at about 0.5 times book or lower, with a few exceptions. At current levels, however, we believe that most of the negatives have been priced in, and downside risk is now less than a year before - the challenge lies in 1) picking companies with the ability to ride the downturn, and 2) identifying the inflection point in which a sustainable recovery would begin. As such, it is not surprising to see distressed funds being set up to scoop some bargains when the time is right.