THE BUZZ
Wah Seong announced on Bursa Malaysia yesterday that it has completed the acquisition of 57.7m ordinary RM0.50 shares, constituting approximately 26.9% equity interest in the issued and paid-up capital of Petra Energy, at RM1.68 per share for a total cash consideration of RM96.94m.
OUR TAKE
It’s finally done. With the completion of the acquisition, Perdana Petroleum (BUY, FV under review) is no longer a substantial shareholder of Petra Energy (BUY, FV RM1.94) with immediate effect. We maintain our view that the acquisition is a synergistic exercise for both Wah Seong and Petra Energy as the former can now generate recurring income from Petra Energy’s brownfield services to complement its existing one-off pipe coating business, while Petra Energy can leverage on Wah Seong’s business network to seek more new jobs moving forward.
Raising FY12 and FY13 estimates. We are revising upwards our earnings forecast for Wah Seong by 1.9% for FY12 and 3.2% by FY13 to account for the increase in contribution from Petra Energy (now a new associate company).
Maintain BUY. With the increase in our earnings forecast, we nudge up our fair value for Wah Seong slightly to RM2.33, based on the existing PER of 13x FY13 EPS. Overall, we are positive on the acquisition, which we view as a synergistic partnership.
Source: OSK
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