Period 4Q13/12M13
Actual vs. Expectations The 4Q13 core net profit of RM123.9m brought
the core FY13 net profit to RM482.9m. This was within our expectations at 97.3%
of our full year net profit estimate of RM496.3m. However, it was below (at
85%) the consensus expectation of RM568.2m.
The core net profit excludes the RM42m one-off
gain adjustment (recognised in 3Q13) arising from the additional investment in
Quippo-Prakash.
Note that we have included Kencana Petroleum’s
estimated 12MFY12 earnings to arrive at our SKPETRO’s 4QFY12 and 12MFY12
figures for a more meaningful YoY comparison and analysis.
Dividends No
dividend was declared as expected.
Key Results Highlights QoQ, the revenue fell (-11.6%) mainly due to
lower offshore construction and subsea services (OCSS) works in the quarter.
The net profit was also down (-12.1%) mainly due to weaker margins from all its
divisions, mainly from OCSS. The sluggish showing within the quarter is
expected as the company’s offshore operations are seasonally weaker during the
monsoon season.
YoY, while the revenue was up (77%), net
profit was down (7.8%) mainly due to: 1) a higher interest cost and 2) lower
margins at the Energy and Joint Ventures (EJV) division due to more manpower
hiring.
Outlook SKPETRO’s strong presence and scale in the
domestic EPCIC market both domestically and globally makes it a prime candidate
for securing further contract wins.
The impending Seadrill asset injection is
expected to increase the group’s net profits further.
Change to Forecasts We are maintaining our earnings estimates for
now pending the company’s analyst briefing tomorrow.
Rating MAINTAIN
OUTPERFORM
Valuation Maintaining our fair value of RM3.82 based on
an implied targeted CY13 PER of 26.5x.
Recall that we had tactically raised our
target price earlier to accommodate the potential earnings accretion from the new
rigs of SKPETRO post its acquisition exercise with Seadrill. The premium
valuation accorded to the stock (versus 15.0x for the sector average and 18.0x
for MMHE) is due to its significant domestic market dominance and service scale
range.
Risks 1) High
capex plans for the company could strain its growth prospect and 2) delay in
contract executions could result in lower than expected earnings.
Source: Kenanga
No comments:
Post a Comment