Maintain BUY; TP unchanged at MYR4.10 (18x FY1/15 PER). Details of this tender are closely guarded but SAKP’s intention to expand its presence in the Brazilian O&G market is lauded. While this tender is in line with SAKP’s aspiration to expand its overseas footprint, it is crucial that the group manages its balance sheet following the recent MOU to acquire Seadrill’s tender rigs for USD2.9b in enterprise value, which is expected to be completed by Jan 2013. Earnings forecasts unchanged.

Eyes five PLSVs in Brazil... According to O&G website Upstreamonline, SAKP’s Vice Chairman Datuk Shahril Shamsuddin stated that the group, in partnership with Seadrill, is looking to bid for the deployment of five flexible pipelay support vessels (PLSVs) under a tender issued by Brazil’s Petrobras.

...from Petrobras’ nine tenders. Petrobras has issued a tender for nine PLSVs of 550-650 tonnes each to carry out pipelay operations in water depths beyond 2,000 feet in the Santos pre-salt basin. The charters on offer are for either 5- or 8-year periods, depending on final prices. Petrobras will likely forego the local content requirement for this tender i.e. that the vessels be built in Brazil, due to overstretched capacity at the domestic yards there.

This tender is bigger than SAKP’s earlier job win in Brazil. Recall that SAKP, with Seadrill, had won a USD1.4b contract from Petrobras in 4Q11 to charter three PLSVs in Brazil. It will build three new PSLVs for this job, comprising one 300-tonne vessel built in Brazil and two 550-tonnes vessels built in Holland, for charter operations in 2014. While we are optimistic of its prospects for this latest tender together with Seadrill, our forecasts, which incorporate the asset purchase from Seadrill, are unchanged for now.

Source: Maybank Research - 07 Nov 2012