Sapura Kencana Petroleum (SKP)’s 1HFY13 earnings were below expectations, accounting for 30.2% of our FY13 full-year forecasts. The weaker results were mainly attributed to the ~RM150m cost of the merger between SapuraCrestPetroleum and Kencana Petroleum, the bulk of which was recognized in 1QFY13. We are trimming our FY13f and FY14f earnings by 23.1% and 5.5% respectively to reflect the one-off costs associated with the exercise. Nonetheless, the fundamentals of the company are intact and, with that, we are maintaining our BUY call on SKP with an unchanged FV of RM2.88.
Below expectations. SKP’s 1HFY13 earnings were below expectations, accounting for 30.2% of our FY13 full year forecasts, mainly due to costs associated to the merger between SapuraCrest Petroleum and Kencana Petroleum. Although the costs were spread/amortised, the bulk of the expenses were recognized in 1QFY13, thereby lowering its overall 1HFY13 net profit. Nonetheless, the group managed to expand its top-line by 119.1% y-o-y and bottom-line by 44.0% y-o-y, largely from higher revenue recorded by its offshore, construction and subsea services (OCSS) segment (+171.7% y-o-y), in line with the higher work scope for Pan-Malaysian contracts.
Orderbook still strong at RM14.5bn. During the analyst briefing yesterday, the management shared that its orderbook remains strong at RM14.5bn, with 46% of the jobs in Malaysia, 32% in Brazil and Mexico combined, 16% in Australia, 5% in South East Asia and 1% in other regions. Management also shared that it will recognise 64% of the existing orderbook as revenue in FY13 and FY14 while the remaining 36% will be only recognised beyond FY15. The group is expected to snap up more contracts when
Petronas awards more jobs in 2H12.
Trimming FY13-FY14 earnings forecast. We are taking the opportunity to trim our FY13f and FY14f earnings forecast by 23.1% and 5.5% respectively to reflect the one-off merger costs and related accounting matters. Despite the downgrade in earnings, the company’s fundamentals are intact as it is poised to benefit from bigger and more ucrative oil and gas (O&G) projects in and outside Malaysia moving forward.
Maintain BUY. Our FV is maintained at RM2.88 despite the downgrade in FY13 earnings, rolling over valuations to FY14’s earnings (it was previously pegged to FY13 earnings). Our valuations are based on a FY14 PE of 20x (previously, FY13 PE of 20x).
SKP is still as one of our top O&G picks as the company has the right business model with big opportunities ahead.
Below expectations. SKP’s 1HFY13 earnings were below expectations, accounting for 30.2% of our FY13 full year forecasts, mainly due to costs associated to the merger between SapuraCrest Petroleum and Kencana Petroleum. Although the costs were spread/amortised, the bulk of the expenses were recognized in 1QFY13, thereby lowering its overall 1HFY13 net profit. Nonetheless, the group managed to expand its top-line by 119.1% y-o-y and bottom-line by 44.0% y-o-y, largely from higher revenue recorded by its offshore, construction and subsea services (OCSS) segment (+171.7% y-o-y), in line with the higher work scope for Pan-Malaysian contracts.
Orderbook still strong at RM14.5bn. During the analyst briefing yesterday, the management shared that its orderbook remains strong at RM14.5bn, with 46% of the jobs in Malaysia, 32% in Brazil and Mexico combined, 16% in Australia, 5% in South East Asia and 1% in other regions. Management also shared that it will recognise 64% of the existing orderbook as revenue in FY13 and FY14 while the remaining 36% will be only recognised beyond FY15. The group is expected to snap up more contracts when
Petronas awards more jobs in 2H12.
Trimming FY13-FY14 earnings forecast. We are taking the opportunity to trim our FY13f and FY14f earnings forecast by 23.1% and 5.5% respectively to reflect the one-off merger costs and related accounting matters. Despite the downgrade in earnings, the company’s fundamentals are intact as it is poised to benefit from bigger and more ucrative oil and gas (O&G) projects in and outside Malaysia moving forward.
Maintain BUY. Our FV is maintained at RM2.88 despite the downgrade in FY13 earnings, rolling over valuations to FY14’s earnings (it was previously pegged to FY13 earnings). Our valuations are based on a FY14 PE of 20x (previously, FY13 PE of 20x).
SKP is still as one of our top O&G picks as the company has the right business model with big opportunities ahead.
Source: OSK
No comments:
Post a Comment