News SKPETRO announced gas production from the Berantai
field (“Berantai”), offshore Peninsular Malaysia has commenced on 20 October
2012.
Gas is exported by a
30km subsea pipeline to the PETRONAS Carigali-operated Angsi Field and onwards
into the Peninsular Malaysian gas grid.
Comments Positive on the announcement as the gas
production has been delayed from its initial date in early-2012. However, we
are neutral on the financial impact as we had already imputed for earnings of
RM30.6m in FY14. We believe that there will be minimal impacts in FY13 earnings
given that there are only 2-3 months left to the financial year.
Recall, the first
commercial production was delayed due to late delivery of the Berantai
FPSO.
Outlook SKPETRO’s MOU with Seadrill is targeted for completion
in early CY13, and will lift its dominance in the tender rig market.
This coupled with the
already strong presence and scale in the EPCIC market (both domestically and globally)
makes SKPETRO a prime suspect for securing further contract wins.
Forecast Maintaining our FY13-14 net profit estimates
of RM495.6m and RM744.3m respectively. SKPETRO is set to announce their 3Q13 in
December.
Rating Maintain
OUTPERFORM
Valuation Maintaining our fair value of RM3.42 based on
an implied target PER of 23.7x.
Recall, we tactically
raised our target price to accommodate the potential earnings accretion from the
new rigs SKPETRO post the acquisition exercise with Seadrill.
We are comfortable
with the premium valuations accorded to the stock (versus 15x for the sector average
and 18x for MMHE) due to its significant domestic market dominance and service
scale range.
Risks 1) High
capex plans for the company could strain 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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