Journey to Wealth
SapuraKencana Petroleum - No Surprises
We maintain our Buy call on SapuraKencana with an unchanged fair value of RM3.76. We remain positive on SapuraKencana's earnings outlook, underpinned by its extensive oilfield service capabilities, which allows it to undertake major oilfield services contract, overseas and locally. Completion of its tender rig business would provide further earnings upside of approximately 18-20% in FY01/14. The deal is expected to be completed by 2Q CY2013. SapuraKencana is our top pick for big cap O&G service providers.
Within expectations.SapuraKencana's 4QFY01/13 core net profit of RM123.9m brought full-year FY01/13 core profit to RM482.7m. This is in line with our and consensus estimates, accounting for 97% and 98% of our and consensus estimates respectively. Revenue grew by 44.1%, driven mainly by its offshore construction and subsea division (OCSS).
Margins were weaker.PBT margins contracted by 7.4%-pts yoy, although this is was mainly due to: 1) one-off merger costs of approximately RM130-140m; and 2) higher interest expense due to the debt undertaken to finance the merger. We expect margins to recover in FY01/14, as the synergies of the merger are realised as SapuraKencana continues to execute more contracts.
Expect more Malaysian contracts in FY01/14. We believe SapuraKencana is one of the main beneficiaries of Petronas' 5-year RM300bn capex commitment due to its scale and capabilities. Furthermore, given that it has achieved first gas for Berantai, we expect it to bid for more marginal field RSC's. Petronas is expected to award more RSC's this year as it only awarded one (KBM cluster) in 2012.
Forecasts. No change to our earnings forecasts pending its analyst briefing later today.
Investment case.Our fair value is unchanged at RM3.76, based on 21x pro-forma FY01/14.
Source: RHB
Related Stocks
| Chart | Stock Name | Last | Change | Volume |
|---|
More articles on Journey to Wealth
Ekovest: No plan to launch another offer for Iskandar Waterfront City
Created by kiasutrader | Mar 29, 2018
Kenanga Research - On our Portfolio - Parliament dissolution around the corner?
Created by kiasutrader | Mar 25, 2013
Plantation Sector - Proposed accounting standard scrapped OVERWEIGHT
Created by kiasutrader | Mar 25, 2013
Pavilion Reit - Limited upside, earnings upside have been priced in HOLD
Created by kiasutrader | Mar 25, 2013
Discussions
Be the first to like this. Showing 0 of 0 comments
Post a Comment
Featured Posts
Latest Videos
MQ Trading Signals
Time
Signal
Duration
Type
2024-11-26 15:50:00
EMA 5
5 Mins
SELL
2024-11-26 14:50:00
EMA 5
5 Mins
BUY
2024-11-26 14:30:00
EMA 5
5 Mins
SELL
2024-11-26 14:30:00
MACD/RSI
5 Mins
SELL
2024-11-26 11:00:00
ADX
Hourly
SELL
Apps
Top Articles
2
save malaysia!
3
4
5
6
Koon Yew Yin's Blog
7
THE INVESTMENT APPROACH OF CALVIN TAN
8
Good Articles to Share
Le Pen makes new threat to withdraw support for French government
#
Stock
Score
Daily Stocks
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
Featured Advertisers / Partners
Ride The Bull Short The Bear
CS Tan
4.9 / 5.0
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....
