Stock Name: SAPCRES
Company Name: SAPURACREST PETROLEUM BHD
Research House: AMMB
SapuraCrest Petroleum Bhd
(Jan 27, RM3.58)
Maintain buy at RM3.43 with fair value RM4.40: We reiterate our 'buy' call on SapuraCrest Petroleum Bhd (SapCrest) with an unchanged fair value of RM4.40 based on an FY12F PER of 22 times. The stock remains our top pick for the oil & gas sector for its attractive valuations, strong order book, re-acceleration of order book accretion and improving earnings delivery.
SapCrest has secured a fresh RM98 million (US$32 million) contract from Petronas' PC Myanmar (Hong Kong) Ltd to provide transport and installation of offshore facilities for Yetagun Phase 4 development in the Andaman Sea offshore Myanmar. Petronas has a 41% stake in the project while the other operators are JX Nippon Oil & Gas Exploration (19%), PTTEP (19%) and MOGE (20%).
The 40-day works, commencing in October or November 2011, involve the transport and installation of one booster compression platform. The Yetagun project, which lies at a water depth of 100m, includes 6,150-metric tonne topsides in three modules for the platform and a 4,650-tonne steel jacket, which are to be built by Thai Nippon Steel in Thailand and Batam Island. The gas is channelled into a cross-border pipeline running to Thailand.
As this is a shallow water project, we expect SapCrest to employ either LTS3000 (40:60 JV with Larsen & Toubro) or QP2000 (26:74 JV with Quippo and MDL) pipe lay construction vessels which were delivered in July last year. This is the first contract which SapuraCrest has secured this year after the US$160 million (RM504 million) Montara job in November 2010.
Assuming a pre-tax margin of 8%, we estimate that this contract will add 2% to FY12F earnings. For now, we maintain our forecasts pending the group's FY11 results in March. While this project will only add a slight 1% to the group's outstanding gross order book of RM9 billion, we believe that this is just a foretaste of the pipeline of massive new orders, given SapCrest's established capability in securing new jobs domestically and overseas.
SapCrest's share price has underperformed Dialog by -74% and Kencana by -29% since the beginning of 2010. The stock currently trades at an attractive CY11F PER only 18 times versus over 20 times for Dialog Group Bhd, Malaysia Marine and Heavy Engineering Sdn Bhd and Kencana Petroleum Bhd. We maintain our view that SapCrest is the favourite to secure offshore installation jobs from Petronas' prolific capex rollout, potentially up to RM40 billion this year. ' AmResearch Sdn Bhd, Jan 27
This article appeared in The Edge Financial Daily, January 28, 2011.
Company Name: SAPURACREST PETROLEUM BHD
Research House: AMMB
SapuraCrest Petroleum Bhd
(Jan 27, RM3.58)
Maintain buy at RM3.43 with fair value RM4.40: We reiterate our 'buy' call on SapuraCrest Petroleum Bhd (SapCrest) with an unchanged fair value of RM4.40 based on an FY12F PER of 22 times. The stock remains our top pick for the oil & gas sector for its attractive valuations, strong order book, re-acceleration of order book accretion and improving earnings delivery.
SapCrest has secured a fresh RM98 million (US$32 million) contract from Petronas' PC Myanmar (Hong Kong) Ltd to provide transport and installation of offshore facilities for Yetagun Phase 4 development in the Andaman Sea offshore Myanmar. Petronas has a 41% stake in the project while the other operators are JX Nippon Oil & Gas Exploration (19%), PTTEP (19%) and MOGE (20%).
The 40-day works, commencing in October or November 2011, involve the transport and installation of one booster compression platform. The Yetagun project, which lies at a water depth of 100m, includes 6,150-metric tonne topsides in three modules for the platform and a 4,650-tonne steel jacket, which are to be built by Thai Nippon Steel in Thailand and Batam Island. The gas is channelled into a cross-border pipeline running to Thailand.
As this is a shallow water project, we expect SapCrest to employ either LTS3000 (40:60 JV with Larsen & Toubro) or QP2000 (26:74 JV with Quippo and MDL) pipe lay construction vessels which were delivered in July last year. This is the first contract which SapuraCrest has secured this year after the US$160 million (RM504 million) Montara job in November 2010.
Assuming a pre-tax margin of 8%, we estimate that this contract will add 2% to FY12F earnings. For now, we maintain our forecasts pending the group's FY11 results in March. While this project will only add a slight 1% to the group's outstanding gross order book of RM9 billion, we believe that this is just a foretaste of the pipeline of massive new orders, given SapCrest's established capability in securing new jobs domestically and overseas.
SapCrest's share price has underperformed Dialog by -74% and Kencana by -29% since the beginning of 2010. The stock currently trades at an attractive CY11F PER only 18 times versus over 20 times for Dialog Group Bhd, Malaysia Marine and Heavy Engineering Sdn Bhd and Kencana Petroleum Bhd. We maintain our view that SapCrest is the favourite to secure offshore installation jobs from Petronas' prolific capex rollout, potentially up to RM40 billion this year. ' AmResearch Sdn Bhd, Jan 27
This article appeared in The Edge Financial Daily, January 28, 2011.
No comments:
Post a Comment