SKPETRO Analysis:-

Excel – http://1drv.ms/1pyT71X

My View:-

- Fair Value:
  – Absolute EY%:
    – Trailing:
      – FY14 (EPS: 0.189) – Fair value 7.31 (Fair Value Uncertainty: LOW)
      – R4Q (EPS: 0.257) – Fair value 9.91 (Fair Value Uncertainty: LOW)
    – Forward:
      – FY15 (EPS: 0.24) – Fair value 9.25 (Fair Value Uncertainty: LOW)
      – FY16 (EPS: 0.278) – Fair value 10.76 (Fair Value Uncertainty: LOW)
    – EPS applied to reach the current stock price (4.11): 0.106
  – SKPETRO is currently undervalued.
- SapuraKencana is the most dynamic company in the oil & gas sector given its transformative developments that have led to a solid order book and earnings visibility.
- The strong performance for the quarter (FY15 Q1) was due mainly to the inclusion of tender rig business subsequent to the completion of its acquisition in April 2013, as well as the inclusion of SKEI (SapuraKencana Energy Inc) business subsequent to completion of its acquisition in February 2014.
  – The group also recognised RM177.8 million gain arising from the acquisition of SKEI.
  – Excluding the gains arising from acquisition of Newfield of RM177.8m, the normalised earnings came in at RM331.6m.
- Orderbook remains healthy at approximately RM26b (62% – OCSS; 19% – drilling; 10% – EJV and 9% – FHUC.), stretching up to year 2024 while tenderbook mimics the orderbook in terms of quantum. More than 20% of the orderbook is expected to be recognised in FY15.
- Broken down geographically, 49% of the jobs are from Brazil, 31% from Malaysia, 14% from South East Asia, 5% from Australia and the rest from Africa. Business segment-wise, 68% of the jobs are from the OCSS segment, 8.3% from the FAB & HUC segment and the rest are from the Drilling and Energy Services segment. Tenderbook value is approximately RM25b.
- SAKP is still a Shariah-compliant stock but is likely to turn otherwise in the Nov 2014 review. Its conventional debt-to-total assets stood at 48% as of July, above the maximum 33% threshold. It could comply if it refinances MYR5b of its MYR15b loans into Islamic debt but may not make it on time for the Nov review.
-  I am positive on SapuraKencana for its strong quality and well diversified orderbook, healthy earnings and consistent job wins.

Latest Financial – Q2 2015 Financial Report (25 Sept 2014) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1748229

At the time of writing, I owned shares of SKPETRO.

http://lcchong.wordpress.com/2014/09/28/skpetro-fundamental-analysis-28-sept-2014/