- We maintain our HOLD recommendation on SapuraKencana
Petroleum (SapuraKencana) with an unchanged fair value of RM2.60/share, pegged
to a FY14F PE of 18x– 20% above the oil & gas sector’s 15x currently.
- Upstream reported that Abu Dhabi-based Mubadala Petroleum
has dished out two key contracts involving the development of the first of
three oilfields in the Gulf of Thailand. Block G1/48’s Manora field, expected
to cost US$246mil (RM763mil), will involve a leased floating, storage and
offloading vessel chartered from Singapore-based Tanker Pacific Offshore
Terminals. The fabrication and installation of the wellhead platform and
pipelines has been awarded to Australia-listed Clough Ltd and SapuraKencana’s
TL Offshore with the platform fabrication at Clough’s yard in Sattahip,
Thailand.
- Separately, France-based Total is expected invite tenders
for an engineering, procurement, construction and commissioning contract to
fabricate and install a new wellhead platform and pipelines to connect six
producing wells for Brunei’s Block B Maharaja Lela gas development. Potential
bidders are SapuraKencana, Swiber Offshore, Malaysia Marine & Heavy
Engineering and Nippon Steel’s Batam-based subsidiary. SKS Marine Construction Yard,
despite capacity constraints currently, may still be involved in some parts of
the contract due to local content requirements.
- These two contracts, which we estimate to cost below
RM300mil individually, are part of the group’s tender book of RM10bil
currently. But given their relatively small scale, they will only slightly
raise SapuraKencana’s order book of
RM14bil, which is still the largest in the country vis-a-vis Bumi Armada’s
RM10bil. Hence, we maintain FY13F-FY15F net profit. We expect 1HFY13 results,
scheduled to be announced later today, to be within our expectation.
- For the rest of the year, we expect a higher magnitude of
newsflow for hook-up, construction and commissioning (HUCC) works vs. pure
fabrication jobs. The tenders which the group is bidding for include the
RM8bil-RM10bil Pan-Malaysian umbrella HUCC contract and RM600mil subsea
maintenance job, which is scheduled to be announced by the end of this year.
But the larger central processing platform and multiple wellhead platforms for
the North Malay gas basin Phase 2 development and Bokor, Dulang and Semarang
fields may only materialise next year. SapuraKencana’s valuations are currently
fair at an FY14F PE of 16x, which is at a 5% premium to the sector. We also do
not discount the possibility of Seadrill disposing of its remaining 6% in
SapuraKencana to fund its asset expansions in Brazil.
Source: AmeSecurities
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