SKPETRO (5218) : SapuraKencana Petroleum - Top of the barrel with a record 9M and a surprise dividend
Target RM6.84 (Stock Rating: ADD)
SapuraKencana’s record 9M net profit broadly met our expectation at 78% of our FY1/15 forecast. We expect a soft 4Q due to the monsoon season. Still, 9M net profit surpassed consensus expectation by fulfilling 92% of estimates. 9M net profit hit RM1bn for the first time, fuelled mostly by contributions from SKEI's and Seadrill's assets. We continue to value the stock at 21.2x CY16 P/E, still at a 30% premium over our target market P/E of 16.3x, pending a review of our premium valuations. We maintain our Add call, with strong order book momentum as a potential re-rating catalyst. SapuraKencana remains our top pick among the oil & gas big caps.
9M net profit surges 74% yoy to a new record
Contributions from SapuraKencana Energy Inc.'s (SKEI or formerly Newfield) oil fields and Seadrill's rigs shored up SapuraKencana’s 3Q net profit by 42% yoy. This led to a 74% yoy surge in 9M net profit, which is an all-time high. The company surprised with a second interim DPS of 2 sen, bringing the DPS to 4.35 sen YTD, beating our full-year forecast of 2.8 sen.
Milestone RM1bn for 9M net profit
SapuraKencana's 9M net profit hit the RM1bn-mark for the first time. The fabrication, hook-up and commissioning (FHUC) segment recorded a contraction, but the offshore construction and subsea services (OCSS) and drilling and energy services segments registered growth, with the main contributors being SKEI's and Seadrill's assets that were acquired in Feb 2014 and Apr 2013, respectively. Nevertheless, we anticipate a soft 4Q due to the monsoon season when OCSS typically slows down.
RM26.2bn order book and growing
SapuraKencana’s order book currently stands at RM26.2bn, including RM1.6bn worth of contracts and contract renewals announced on 5 Dec. The order book is set to grow as management scouts for more contracts, including one for Teknik Berkat drilling rig, which is idle. Management said during the conference call post-results announcement that it targets to get the rig contracted by Mar 2015. See overleaf for more conference call highlights.
Source: CIMB Daybreak - 10 December 2014
Target RM6.84 (Stock Rating: ADD)
SapuraKencana’s record 9M net profit broadly met our expectation at 78% of our FY1/15 forecast. We expect a soft 4Q due to the monsoon season. Still, 9M net profit surpassed consensus expectation by fulfilling 92% of estimates. 9M net profit hit RM1bn for the first time, fuelled mostly by contributions from SKEI's and Seadrill's assets. We continue to value the stock at 21.2x CY16 P/E, still at a 30% premium over our target market P/E of 16.3x, pending a review of our premium valuations. We maintain our Add call, with strong order book momentum as a potential re-rating catalyst. SapuraKencana remains our top pick among the oil & gas big caps.
9M net profit surges 74% yoy to a new record
Contributions from SapuraKencana Energy Inc.'s (SKEI or formerly Newfield) oil fields and Seadrill's rigs shored up SapuraKencana’s 3Q net profit by 42% yoy. This led to a 74% yoy surge in 9M net profit, which is an all-time high. The company surprised with a second interim DPS of 2 sen, bringing the DPS to 4.35 sen YTD, beating our full-year forecast of 2.8 sen.
Milestone RM1bn for 9M net profit
SapuraKencana's 9M net profit hit the RM1bn-mark for the first time. The fabrication, hook-up and commissioning (FHUC) segment recorded a contraction, but the offshore construction and subsea services (OCSS) and drilling and energy services segments registered growth, with the main contributors being SKEI's and Seadrill's assets that were acquired in Feb 2014 and Apr 2013, respectively. Nevertheless, we anticipate a soft 4Q due to the monsoon season when OCSS typically slows down.
RM26.2bn order book and growing
SapuraKencana’s order book currently stands at RM26.2bn, including RM1.6bn worth of contracts and contract renewals announced on 5 Dec. The order book is set to grow as management scouts for more contracts, including one for Teknik Berkat drilling rig, which is idle. Management said during the conference call post-results announcement that it targets to get the rig contracted by Mar 2015. See overleaf for more conference call highlights.
Source: CIMB Daybreak - 10 December 2014
