Stock Name: SAPCRES
Company Name: SAPURACREST PETROLEUM BHD
Research House: AMMB
SapuraCrest Petroleum Bhd
(May 19, RM3.81)
Maintain buy at RM3.80 with fair value of RM4.75: We reiterate our 'buy' call on SapuraCrest Petroleum (SapCrest) with an unchanged fair value of RM4.75 based on an unchanged FY12F price-earnings ratio (PER) of 22 times.
We do not expect any change in direction or strategy from the realignment in SapCrest's management as its major shareholder, executive vice-chairman and president Datuk Shahril Shamsuddin, remains in his executive role for the group.
Following the award of the risk service contract for the Berantai marginal oilfield development on Jan 31, SapCrest's management has been divided into two separate divisions, Energy Ventures & Operations and Oil & Gas Construction Services.
SapCrest's current group CEO Rohaizad Darus has been redesignated with immediate effect as the CEO for the Oil & Gas Construction Services Division while Reza Abdul Rahim is the CEO for Energy Ventures & Operations.
Rohaizad has been involved in the oil and gas industry for the past 22 years, beginning his career with Petronas Gas Bhd and later with Esso Production Malaysia Inc. He has been with the Sapura Group for the past nine years and has been its chief operating officer from mid-2008 until his appointment as CEO on Feb 1, 2010.
SapCrest's outstanding orders are currently worth RM8.6 billion, which will last for another three years. But the group's Pan-Malaysian transport and installation project has the option for two annual renewals. Hence, the group's net order book could be added to by another RM3 billion to RM12 billion ' which remains by far the largest order book in Malaysia's O&G industry.
Given SapCrest's dominance in the installation of pipeline and facilities (IPF) services in Malaysia, we maintain our view that SapCrest is likely to secure additional offshore installation jobs from Petroliam Nasional Bhd's prolific captial expenditure rollout, potentially up to RM250 billion over the next five years. The recent turnaround in the group's marine division adds further sizzle to the stock's attractive valuations, reacceleration of order book accretion and improving earnings delivery.
The stock currently trades at an attractive CY11F PER of only 17 times vis-''-vis over 20 times for Dialog Group Bhd, Malaysia Marine and Heavy Engineering Sdn Bhd and Kencana Petroleum Bhd. ' AmResearch, May 19
This article appeared in The Edge Financial Daily, May 20, 2011.
Company Name: SAPURACREST PETROLEUM BHD
Research House: AMMB
SapuraCrest Petroleum Bhd
(May 19, RM3.81)
Maintain buy at RM3.80 with fair value of RM4.75: We reiterate our 'buy' call on SapuraCrest Petroleum (SapCrest) with an unchanged fair value of RM4.75 based on an unchanged FY12F price-earnings ratio (PER) of 22 times.
We do not expect any change in direction or strategy from the realignment in SapCrest's management as its major shareholder, executive vice-chairman and president Datuk Shahril Shamsuddin, remains in his executive role for the group.
Following the award of the risk service contract for the Berantai marginal oilfield development on Jan 31, SapCrest's management has been divided into two separate divisions, Energy Ventures & Operations and Oil & Gas Construction Services.
SapCrest's current group CEO Rohaizad Darus has been redesignated with immediate effect as the CEO for the Oil & Gas Construction Services Division while Reza Abdul Rahim is the CEO for Energy Ventures & Operations.
Rohaizad has been involved in the oil and gas industry for the past 22 years, beginning his career with Petronas Gas Bhd and later with Esso Production Malaysia Inc. He has been with the Sapura Group for the past nine years and has been its chief operating officer from mid-2008 until his appointment as CEO on Feb 1, 2010.
SapCrest's outstanding orders are currently worth RM8.6 billion, which will last for another three years. But the group's Pan-Malaysian transport and installation project has the option for two annual renewals. Hence, the group's net order book could be added to by another RM3 billion to RM12 billion ' which remains by far the largest order book in Malaysia's O&G industry.
Given SapCrest's dominance in the installation of pipeline and facilities (IPF) services in Malaysia, we maintain our view that SapCrest is likely to secure additional offshore installation jobs from Petroliam Nasional Bhd's prolific captial expenditure rollout, potentially up to RM250 billion over the next five years. The recent turnaround in the group's marine division adds further sizzle to the stock's attractive valuations, reacceleration of order book accretion and improving earnings delivery.
The stock currently trades at an attractive CY11F PER of only 17 times vis-''-vis over 20 times for Dialog Group Bhd, Malaysia Marine and Heavy Engineering Sdn Bhd and Kencana Petroleum Bhd. ' AmResearch, May 19
This article appeared in The Edge Financial Daily, May 20, 2011.
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