News SKPETRO announced that its subsidiary,
Kencana HL had been awarded Engineering, Procurement, Construction and
Commissioning (EPCC) works for the Patricia Satellite (PT-SA) Topside and
Serendah Accommodation (SN-AA) Topside located offshore Bintulu, Sarawak.
Both contracts are estimated to be worth between RM250-300m
and are expected to be completed and delivered to Murphy Sarawak by
1HCY13.
Comments We are neutral on the win as the contract sum
is marginal versus Kencana’s current EPCIC order book of RM2.4b as at May 2012.
We have already
factored in further
EPC wins of RM2.0b for FY14.
Outlook We are positive on the merged entity for its
1) scale and 2) existing global track record, which will enhance its
competitive edge during new contract bids.
Forecast Maintaining our FY13-14 net profit estimates
of RM469.1m and RM719.2m.
Rating MAINTAIN OUTPERFORM
Valuation Our fair value remains unchanged at
RM2.79/share at this juncture
(based on 20.0x
PER, a close approximate to the average of the
trading PERs of Bumi Armada and MMHE, which are around 19.0x and 22.6x
respectively).
Risks 1) High capex plans for the company could strain the balance sheet
and growth prospects, 2) high competition as there is a multitude of players
who are highly diversified and 3) In the event of a downturn in the global
economy and the demand for crude oil and gas, demand for its services will be jeopardised.
Source: Kenanga
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