Stock Name: SAPCRES
Company Name: SAPURACREST PETROLEUM BHD
Research House: MIDF
SapuraCrest Petroleum Bhd
(Sept 2, RM2.43)
Maintain buy at RM2.34 with target price RM2.80:SapuraCrest Petroleum (SapCrest announced charter renewals for both of its self-erecting tender rigs, the T-6 and'' T-10. The T-6 charter was scheduled to expire this December, while the T-10 charter ended in July. ''
The T-6 rig will be charted at US$85 million for 24 months with an option of two extensions, for three months each. This'' is about 50% higher than the previous rate and translates into a per day'' charter of US$101,100 or RM 323,800. At present, T-6 is chartered by Carigali Hess Operating Company and Carigali PTTEPI Operating Company in the waters of the Malaysia-Thailand joint-venture'' development area (MTJDA).
The T-10 rig will be chartered at RM49 million for 24 months at US$68,300 per day or RM218,500 per day. The lower rate is warranted as it is a bare-boat charter'' which usually commands less favourable rates. The rig is also operating in MTJDA waters for Seadrill UK for Chevron's Thailand offshore drilling. ''
The 50% upward revision of the T-6 rig rate was as we had forecast premised on prevailing market rates. However, the T-10 rate is short of expectation given that it is a bare-boat charter. Both quoted rates are in line with the present global rate of US$117,000 per day, however, against the market high of US$124,000 in April this year. ''
Our earnings forecasts will be kept largely unchanged as we had already factored in a similar revision in the rates of both rigs. We have made some minor'' adjustments towards T-10's contributions.'' ''
Note that the next revision of SapCrest's'' three other rigs, the T-3'' (1Q2012), T-9 and Teknik Barat (both 2Q2012) are expected to be reviewed by 2012. As such, we'' expect contributions from the Drilling segment to remain steady throughout FY2011-12. ''
Maintain 'buy' with unchanged target price (TP) of RM2.80. Our TP is based on a PER for 2011 of 15 times, a premium against our employed'' sector average'' EPS 2011 of 14'' times. SapCrest'' remains our top pick in the sector given its strong order book visibility, ownership of strategic assets (via'' pipe-lay and Seadrill's rigs)'' as well as the fact that it is a potential beneficiary of Petronas contracts given its proven track record. Currently, SapCrest is trading at 12.5 times, within its five-year median PER'' band of 7.6 times to 20 times. ' MIDF Research, Sept 2
This article appeared in The Edge Financial Daily, September 3 2010.
Company Name: SAPURACREST PETROLEUM BHD
Research House: MIDF
SapuraCrest Petroleum Bhd
(Sept 2, RM2.43)
Maintain buy at RM2.34 with target price RM2.80:SapuraCrest Petroleum (SapCrest announced charter renewals for both of its self-erecting tender rigs, the T-6 and'' T-10. The T-6 charter was scheduled to expire this December, while the T-10 charter ended in July. ''
The T-6 rig will be charted at US$85 million for 24 months with an option of two extensions, for three months each. This'' is about 50% higher than the previous rate and translates into a per day'' charter of US$101,100 or RM 323,800. At present, T-6 is chartered by Carigali Hess Operating Company and Carigali PTTEPI Operating Company in the waters of the Malaysia-Thailand joint-venture'' development area (MTJDA).
The T-10 rig will be chartered at RM49 million for 24 months at US$68,300 per day or RM218,500 per day. The lower rate is warranted as it is a bare-boat charter'' which usually commands less favourable rates. The rig is also operating in MTJDA waters for Seadrill UK for Chevron's Thailand offshore drilling. ''
The 50% upward revision of the T-6 rig rate was as we had forecast premised on prevailing market rates. However, the T-10 rate is short of expectation given that it is a bare-boat charter. Both quoted rates are in line with the present global rate of US$117,000 per day, however, against the market high of US$124,000 in April this year. ''
Our earnings forecasts will be kept largely unchanged as we had already factored in a similar revision in the rates of both rigs. We have made some minor'' adjustments towards T-10's contributions.'' ''
Note that the next revision of SapCrest's'' three other rigs, the T-3'' (1Q2012), T-9 and Teknik Barat (both 2Q2012) are expected to be reviewed by 2012. As such, we'' expect contributions from the Drilling segment to remain steady throughout FY2011-12. ''
Maintain 'buy' with unchanged target price (TP) of RM2.80. Our TP is based on a PER for 2011 of 15 times, a premium against our employed'' sector average'' EPS 2011 of 14'' times. SapCrest'' remains our top pick in the sector given its strong order book visibility, ownership of strategic assets (via'' pipe-lay and Seadrill's rigs)'' as well as the fact that it is a potential beneficiary of Petronas contracts given its proven track record. Currently, SapCrest is trading at 12.5 times, within its five-year median PER'' band of 7.6 times to 20 times. ' MIDF Research, Sept 2
This article appeared in The Edge Financial Daily, September 3 2010.
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