SapuraKencana Petroleum; Buy
Price Target: RM4.20; SAKP MK

SAKP announced yesterday a proposed placement exercise of 587m new SAKP shares at an issue price of RM2.80 each, raising RM1,643.6m (~US$526m) total proceeds which will be utilised for its proposed integration of Seadrill’s tender rigs. The placement is expected to be completed by end-Apr13.

The proposed placement is slightly different from SAKP’s initial plan (announced in Feb13) to issue US$250m of new shares placement and US$238m of 3-year redeemable exchangeable preference shares (REPS). Nevertheless, we have already imputed 532m new shares to be placed out pursuant to the proposed rig integration, therefore we will leave our forecast intact for now.

We maintain our Buy rating with RM4.20 TP (based on 22x FY14 EPS). We continue to like SAKP as its unrivalled integrated offshore services will naturally place it among the frontrunners for bidding of mega projects in Malaysia.

Source: HwangDBS Research - 4 Apr 2013