PENERGY (5133) : Affin Hwang maintains Sell on Petra Energy
KUALA LUMPUR: Affin Hwang Research has maintained its Sell on Petra energy with a target price of RM1.28, it said in a note on Monday.
"The group is now trading at 16 timnes 2015 EPS, a substantial valuation premium to other comparable small cap O&G companies of 9-10 times. We also note that Petra Energy has an uneven track record in project execution and profitability," it said.
The reseach house said Petra Energy reported a strong earnings turnaround on higher contribution from its integrated brownfield services business.
The grop’s 9M14 core net profit came in at RM16mil, a significant turnaround from RM12mil losses in 9M13, driven by higher activities executed for Petronas Carigali Pan Malaysia Hook-up, Commissioning and Top-side Major Maintenance contract secured in 2013.
The current Pan Malaysia contract fetches higher profit margin than its previous Shell and Petronas Carigali contracts.
However, Affin Hwang has cut its 2014-16E core EPS for Petra Energy by 13-23%, imputing the weaker-than-expected 9M14 results, more prudent EBIT margin assumption of 6.5%-7% (vs 8%) for its integrated brownfield services segment; and lower new contract wins assumption of RM50mil view of the softening global oil & gas capex.
http://www.thestar.com.my
KUALA LUMPUR: Affin Hwang Research has maintained its Sell on Petra energy with a target price of RM1.28, it said in a note on Monday.
"The group is now trading at 16 timnes 2015 EPS, a substantial valuation premium to other comparable small cap O&G companies of 9-10 times. We also note that Petra Energy has an uneven track record in project execution and profitability," it said.
The reseach house said Petra Energy reported a strong earnings turnaround on higher contribution from its integrated brownfield services business.
The grop’s 9M14 core net profit came in at RM16mil, a significant turnaround from RM12mil losses in 9M13, driven by higher activities executed for Petronas Carigali Pan Malaysia Hook-up, Commissioning and Top-side Major Maintenance contract secured in 2013.
The current Pan Malaysia contract fetches higher profit margin than its previous Shell and Petronas Carigali contracts.
However, Affin Hwang has cut its 2014-16E core EPS for Petra Energy by 13-23%, imputing the weaker-than-expected 9M14 results, more prudent EBIT margin assumption of 6.5%-7% (vs 8%) for its integrated brownfield services segment; and lower new contract wins assumption of RM50mil view of the softening global oil & gas capex.
http://www.thestar.com.my
