Puncak Niaga announced on Bursa Malaysia yesterday that it has signed a MYR187m O&G contract for the transportation and installation of a pipeline for the North Malay basin project. Maintain TRADING BUY, with our FV unchanged at MYR2.00, based on a 3x FY13 P/E.

-  Salient details. Puncak’s wholly-owned subsidiary GOM Resources SB inked an agreement with HESS Exploration and Production Malaysia B.V. for the provision of the integrated transportation and installation of offshore facilities for the North Malay basin project. The scope of work mainly comprises the transportation and installation of an O&G pipeline measuring 53km at the Kamelia field located in the south of the MalaysiaThailand Joint Development Area. The contract tenure is for 17 months.

-  First O&G announcement. The news marked Puncak’s first-of-its-kind O&G contract-related announcement since venturing into the O&G segment through its USD59m acquisition of GOM Resources in 2011. We believe this signifies management’s intention to expand the company’s O&G division in the near term, as evidenced in its recent tieup with Indonesia’s Medco Energi to co-operate in marginal field development projects and risk service contracts in Malaysia as well as to explore opportunities within the regional exploration and production space.

-  TRADING BUY. We make no changes to our FY13 and FY14 earnings estimates at this juncture as the newly secured contract has been incorporated in our orderbook replenishment assumptions. Our model captures around MYR900m-MYR950m annual revenue for its O&G segment over the next two years. Maintain TRADING BUY on Puncak Niaga, with our FV unchanged at MYR2.00, based on a 3x FY13 P/E.

Source: RHB