Stock Name: SAPCRES
Company Name: SAPURACREST PETROLEUM BHD
Research House: AMMB
SapuraCrest Petroleum Bhd
(March 29, RM3.64)
Maintain buy at RM3.55 with revised fair value of RM4.75 (from RM4.40): We reiterate our 'buy' call on SapuraCrest Petroleum Bhd (SapCrest) with a higher fair value of RM4.75 (versus RM4.40 previously) given our higher earnings estimates but based on an unchanged FY12F PER of 22 times.
SapCrest's FY11 net profit of RM231 million (+35% year-on-year) was above expectations, 7% above our earlier FY11F earnings of RM216 million and 8% above street estimate of RM215 million. Traditionally, 4Q tends to be the group's weakest quarter due to the monsoon season which disrupts SapCrest's installation of pipeline and facilities (IPF) and drilling divisions. However, the group's 4QFY11 net profit of RM73mil (+33% quarter-on-quarter and 77% y-o-y) turned out to be the strongest quarter for FY11.
The stronger-than-expected results stemmed from: (1) higher-than-expected earnings before interest and tax (Ebit) margins from the IPF division (23% for4QFY11 versus 12% for 3QFY11) despite a 60% contraction in revenue due to the monsoon season; (2) turnaround in the marine division, which registered a surprise Ebit profit of RM13 million for 4QFY11 (versus RM39 million loss for 3QFY11). This division had been suffering losses since 2QFY10; and (3) lower minority charge (-34% q-o-q), likely due to lower contributions from the IPF and drilling divisions.
The group declared a final single-tier dividend of 5.5 sen, to raise FY11 single-tier dividend per share to 8.5 sen (+21% y-o-y). This was above our nine sen projection, largely due to the stronger earnings and a higher payout ratio of 46% compared to our earlier projection of 40%.
We have raised FY12F to FY13F earnings by 11% largely due to: (1) a one percentage point increase in Ebit margins to 12% for the group's offshore installation division; (2) higher contributions from the marine services operations; and (3) maiden contributions of RM20 million for FY13F from the group's 25% equity stake in the Berantai marginal field, assuming a conservative projected internal rate of return of 12%.
The stock currently trades at an attractive CY11F PER of only 16 times vis-''-vis over 20 times for Dialog Group, MMHE and Kencana Petroleum. The turnaround in the group's marine division adds further sizzle to the stock's attractive valuations, a huge RM9 billion order book and improving earnings delivery. Given SapCrest's dominance in IPF services in Malaysia, we maintain our view that SapCrest is likely to secure additional offshore installation jobs from Petronas' prolific capex rollout, potentially up to RM40 billion this year. ' AmResearch, March 29
This article appeared in The Edge Financial Daily, March 30, 2011.
Company Name: SAPURACREST PETROLEUM BHD
Research House: AMMB
SapuraCrest Petroleum Bhd
(March 29, RM3.64)
Maintain buy at RM3.55 with revised fair value of RM4.75 (from RM4.40): We reiterate our 'buy' call on SapuraCrest Petroleum Bhd (SapCrest) with a higher fair value of RM4.75 (versus RM4.40 previously) given our higher earnings estimates but based on an unchanged FY12F PER of 22 times.
SapCrest's FY11 net profit of RM231 million (+35% year-on-year) was above expectations, 7% above our earlier FY11F earnings of RM216 million and 8% above street estimate of RM215 million. Traditionally, 4Q tends to be the group's weakest quarter due to the monsoon season which disrupts SapCrest's installation of pipeline and facilities (IPF) and drilling divisions. However, the group's 4QFY11 net profit of RM73mil (+33% quarter-on-quarter and 77% y-o-y) turned out to be the strongest quarter for FY11.
The stronger-than-expected results stemmed from: (1) higher-than-expected earnings before interest and tax (Ebit) margins from the IPF division (23% for4QFY11 versus 12% for 3QFY11) despite a 60% contraction in revenue due to the monsoon season; (2) turnaround in the marine division, which registered a surprise Ebit profit of RM13 million for 4QFY11 (versus RM39 million loss for 3QFY11). This division had been suffering losses since 2QFY10; and (3) lower minority charge (-34% q-o-q), likely due to lower contributions from the IPF and drilling divisions.
The group declared a final single-tier dividend of 5.5 sen, to raise FY11 single-tier dividend per share to 8.5 sen (+21% y-o-y). This was above our nine sen projection, largely due to the stronger earnings and a higher payout ratio of 46% compared to our earlier projection of 40%.
We have raised FY12F to FY13F earnings by 11% largely due to: (1) a one percentage point increase in Ebit margins to 12% for the group's offshore installation division; (2) higher contributions from the marine services operations; and (3) maiden contributions of RM20 million for FY13F from the group's 25% equity stake in the Berantai marginal field, assuming a conservative projected internal rate of return of 12%.
The stock currently trades at an attractive CY11F PER of only 16 times vis-''-vis over 20 times for Dialog Group, MMHE and Kencana Petroleum. The turnaround in the group's marine division adds further sizzle to the stock's attractive valuations, a huge RM9 billion order book and improving earnings delivery. Given SapCrest's dominance in IPF services in Malaysia, we maintain our view that SapCrest is likely to secure additional offshore installation jobs from Petronas' prolific capex rollout, potentially up to RM40 billion this year. ' AmResearch, March 29
This article appeared in The Edge Financial Daily, March 30, 2011.
No comments:
Post a Comment