Stock Name: KENCANA
Company Name: KENCANA PETROLEUM BHD
Research House: MIDF
Kencana Petroleum Bhd
(March 30, RM2.61)
Maintain buy at RM2.58 with target price RM2.95: Via its wholly owned subsidiary Kencana HL Sdn Bhd, Kencana Petroleum has secured an engineering, procurement and construction (EPC) contract from Petrofac Ltd. The total value of the contract is estimated at RM216 million.
The EPC contract entails the fabrication of two wellhead platforms for the Cendor Phase 2 development project. The Cendor oilfield is located off the coast of Terengganu. The EPC contract is expected to be completed by June 2012.
Inclusive of the EPC contract, Kencana has won more than RM900 million worth of contracts so far this year. Its total'' outstanding contract awards is estimated at RM2.2 billion.
The pace and the size of the recent contract awards achieved our expectations considering that Kencana has a quarterly work rate of circa RM400 million.
Our forward earnings projections assume that the present pace of contract replenishments will pick up in terms of size and consistency in terms of award.
We maintain 'buy' with a target price of RM2.95 based on full-year earnings per share of'' 22.4 times, 10% higher than its'' four-year average price-earnings ratio of 20.4 times. The premium rating is justifiable as we believe Kencana will continue to be one of the key beneficiaries of upcoming contract awards given its proven track record with Petronas and other oil majors and its status as a Petronas-licensee to fabricate offshore oil and gas structures. ' MIDF Research, March 30
This article appeared in The Edge Financial Daily, March 31, 2011.
Company Name: KENCANA PETROLEUM BHD
Research House: MIDF
Kencana Petroleum Bhd
(March 30, RM2.61)
Maintain buy at RM2.58 with target price RM2.95: Via its wholly owned subsidiary Kencana HL Sdn Bhd, Kencana Petroleum has secured an engineering, procurement and construction (EPC) contract from Petrofac Ltd. The total value of the contract is estimated at RM216 million.
The EPC contract entails the fabrication of two wellhead platforms for the Cendor Phase 2 development project. The Cendor oilfield is located off the coast of Terengganu. The EPC contract is expected to be completed by June 2012.
Inclusive of the EPC contract, Kencana has won more than RM900 million worth of contracts so far this year. Its total'' outstanding contract awards is estimated at RM2.2 billion.
The pace and the size of the recent contract awards achieved our expectations considering that Kencana has a quarterly work rate of circa RM400 million.
Our forward earnings projections assume that the present pace of contract replenishments will pick up in terms of size and consistency in terms of award.
We maintain 'buy' with a target price of RM2.95 based on full-year earnings per share of'' 22.4 times, 10% higher than its'' four-year average price-earnings ratio of 20.4 times. The premium rating is justifiable as we believe Kencana will continue to be one of the key beneficiaries of upcoming contract awards given its proven track record with Petronas and other oil majors and its status as a Petronas-licensee to fabricate offshore oil and gas structures. ' MIDF Research, March 30
This article appeared in The Edge Financial Daily, March 31, 2011.
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