Stock Name: SILKHLD
Company Name: SILK HOLDINGS BERHAD
SILK Holdings Bhd
(July 12, 29.5 sen)
Maintain buy at 26.5 sen with target price 46 sen: According to The Edge Financial Daily, on July 12 SILK secured four'' long-term deals worth RM39.75 million from Petronas Carigali Sdn Bhd to provide four anchor handling tug supply vessels (AHTSV), commencing July 2011, with options to extend for a further one year each. Year-to-date, SILK has secured a total'' of'' RM63.75 million (RM24 million + RM39.75 million) in contracts for its AHTSV business, to be realised in FY12 ending July 31.
We remain buoyant on SILK's oil and gas division as we think the high oil price and the recent announcement of Petroliam Nasional Bhd raising its capex to RM300 billion over the next five years, signify more oil exploration and production which will in turn favour SILK, as more than 70% of its group revenue was contributed by the O&G business. Furthermore, our house view of a positive sentiment within the O&G sector highlights its potential.
We are raising our earnings projection for FY12 by 13% to factor in the RM39.75 million contracts from Petronas Carigali.
We retain 'buy' with an unchanged target price of 46 sen, as we foresee depreciation and amortisation paring down in'' FY12, bringing the figures back to the black. We continue to like SILK for its steady earnings base and the bright prospects from the local O&G sector. Our valuation is based on sum-of-parts; with a discounted cash flow valuation for'' the highway subsidiary, using a weighted average cost of capital of'' 5.89% and at 8.1 times price earnings ratio of our'' projected FY12 earnings per share on the O&G subsidiary. ' MIDF Research, July 12
This article appeared in The Edge Financial Daily, July 13, 2011.
Company Name: SILK HOLDINGS BERHAD
| Research House: MIDF | Price Call: BUY | Target Price: 0.46 |
SILK Holdings Bhd
(July 12, 29.5 sen)
Maintain buy at 26.5 sen with target price 46 sen: According to The Edge Financial Daily, on July 12 SILK secured four'' long-term deals worth RM39.75 million from Petronas Carigali Sdn Bhd to provide four anchor handling tug supply vessels (AHTSV), commencing July 2011, with options to extend for a further one year each. Year-to-date, SILK has secured a total'' of'' RM63.75 million (RM24 million + RM39.75 million) in contracts for its AHTSV business, to be realised in FY12 ending July 31.
We remain buoyant on SILK's oil and gas division as we think the high oil price and the recent announcement of Petroliam Nasional Bhd raising its capex to RM300 billion over the next five years, signify more oil exploration and production which will in turn favour SILK, as more than 70% of its group revenue was contributed by the O&G business. Furthermore, our house view of a positive sentiment within the O&G sector highlights its potential.
We are raising our earnings projection for FY12 by 13% to factor in the RM39.75 million contracts from Petronas Carigali.
We retain 'buy' with an unchanged target price of 46 sen, as we foresee depreciation and amortisation paring down in'' FY12, bringing the figures back to the black. We continue to like SILK for its steady earnings base and the bright prospects from the local O&G sector. Our valuation is based on sum-of-parts; with a discounted cash flow valuation for'' the highway subsidiary, using a weighted average cost of capital of'' 5.89% and at 8.1 times price earnings ratio of our'' projected FY12 earnings per share on the O&G subsidiary. ' MIDF Research, July 12
This article appeared in The Edge Financial Daily, July 13, 2011.
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