SKPETRO Analysis:-

Excel – http://1drv.ms/1ukfATE

Notes – http://tinyurl.com/mqm26z6

My View:-

• Valuation:
  • 3-Y DCF:
    • Good Scenario: 4.58 (Fair value uncertainty: LOW)
    • Base Scenario: 4.21 (Fair value uncertainty: LOW)
    • Bad Scenario: 3.87 (Fair value uncertainty: LOW)
    • Ugly Scenario: 3.56 (Fair value uncertainty: LOW)
    • If growth of FCFF in the next 3 years is -13%, SKPETRO still worth 2.35.
  • Absolute PE:
    • FY14 (EPS: 0.189) – Fair value 2.31 (Fair Value Uncertainty: HIGH)
    • R4Q (EPS: 0.274) – Fair value 3.34 (Fair Value Uncertainty: MEDIUM)
  • Absolute EY%:
    • Trailing:
      • FY14 (EPS: 0.189) Fair value 4.27 (Fair Value Uncertainty: LOW)
      • R4Q (EPS: 0.274) Fair value 6.18 (Fair Value Uncertainty: LOW)
    • Forward:
      • FY15 (EPS: 0.225) Fair value 5.08 (Fair Value Uncertainty: LOW)
      • FY16 (EPS: 0.237) Fair value 5.35 (Fair Value Uncertainty: LOW)
    • EPS applied to reach the current stock price (2.35): 0.104
• Valuation of SKPETRO is veryy attractive.
• The recent sell-off in SKPETRO shares (-43% qoq) looks overdone. While the lower oil price has weakened the global oil & gas capex and hence, its business outlook, SKPETRO has a strong orderbook of RM26.2bn to buffer a medium-term industry slowdown. Also, its good geographical spread provides the flexibility to redeploy its asset should there be a prolonged slowdown in its home market. Key re-rating catalysts are the stabilisation in oil price, improved investor sentiment and possible return onto the Shariah compliant list in May15.
• Remember the Warren Buffett’s most famous investment sayings: "Be fearful when others are greedy. Be greedy when others are fearful."

Latest Financial – Q3 2015 Financial Report (9 Dec 2014) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1820653

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

http://lcchong.wordpress.com/2015/01/04/skpetro-fundamental-analysis-4-jan-2015/