News SKPETRO announced that its subsidiary in Australia had been awarded a hook-up and commissioning job at the Montara Development Contract from PTTEP Australia.
The value (with fully extended options) is worth approximately AUD14.8m (around RM50m)
The project commences early Oct-2012 and is for three months.
Comments We are neutral on the win as the contract sum is marginal versus Sapura's current EPCIC order book of RM12.5b as at 31 May 2012.
We have also already factored in further wins of RM500m after it completes the DomGas project.
Outlook We are positive on the merged entity for its 1) scale and 2) existing global track records, which will enhance its competitive edge during new contract bids.
Forecast Maintaining our FY13-14 net profit estimates of RM469.1m and RM719.2m respectively.
Rating MAINTAIN OUTPERFORM
Valuation Our fair value remains unchanged at RM2.79/share, at this juncture. Our valuation is based on 20.0x PER, which is a close approximate to the average of the trading PERs of Bumi Armada and MMHE, which are around 19.0x and 22.6x, respectively.
Risks 1) Integration challenges given the size and scale of both companies;
2) the need to continuously win sizeable contracts to support bottom line growth; and
3) intense competition to gain international projects could lead to pressures to lower margins on bids.