Journey to Wealth
Puncak Niaga - Oil & gas booster Hold
- We maintain our HOLD recommendation on Puncak Niaga Holdings, with an unchanged fair value of RM1.54/share. This pegs the stock to a 7% discount on its estimated sumof-parts (SOP) value.
- Puncak's 2QFY12 net profit came in at RM78mil ' bringing 1HFY12 earnings to RM147mil. As expected, Puncak did not declare any interim dividend for the quarter under review.
- The results constituted 56% of both consensus as well as our estimates. We envisage 4Q contributions from the oil & gas division to taper off towards the year-end.
- 2QFY12 earnings rose 15% QoQ largely on a pick-up in activities for both the construction and oil & gas operations.
- Similarly, 1HFY12 swung to the black from a RM4mil loss a year earlier on improvements in all of its operating units. Group operating margin remained fairly stable at ~26%.
- Turnover for SYABAS grew 32% YoY to RM1.3bil ' reflecting the recognition of a scheduled tariff hike effective 1 January 2012 as per its concession agreement.
- At half-time, the oil & gas division reported an EBIT of RM41mil (~7% of group EBIT) compared with an operating loss of RM6mil a year earlier. This was further lifted by the full-year consolidation of a 100% stake in Global Offshore (Malaysia).
- We have assumed Puncak to sustain an oil & gas order book of RM700mil p.a. over FY12F-14. This is anchored by more Offshore Installation Contracts (OIC) from Petronas.
- In addition, Puncak continues to eye marginal oilfield opportunities in Malaysia although the timing is uncertain. Our preliminary estimates indicate that any such win may lift its break-up value by RM0.33/share (6.4%) based on an effective stake of 30%.
- But, we believe it is still dead money risk for Puncak despite the stock trading at a steep 75% discount to its SOP value.
- As such, our HOLD rating on Puncak remains until there is more clarity on the water impasse in Selangor post the 13th General Election.
Source: AmeSecurities
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
