SKPETRO (5218) - SapuraKencana may make impairments up to RM700m, says AllianceDBS Research
March 18, 2015 : 8:42 AM MYT
KUALA LUMPUR (March 18): AllianceDBS Research has downgraded SapuraKencana Petroleum Bhd (SAKP) to “Hold” at RM2.31 with a lower target price of RM2.55 (from RM3.25) and said there could be possible impairments of upstream assets in 4QFY15 but may be offfset by new gas reserves.
In a note today, analys Arhnue Tan said she views that SAKPmay make impairments of up to RM700 million in the upcoming 4QFY15 results as Newfield’s assets were purchased in FY14 when crude oil was above US$90/barrel.
“That said, the impairment is a non-cash item and impact may be muted as it could be offset by the inclusion of new gas reserves discovered in 2014,” she said.
Tan said a greater concern in the upcoming results would be if SAKP has to make allowances for trade receivables in the marine or drilling segments and in the worst case scenario, for the Petrobras contract.
“We see this as unlikely for now as the bulk of SAKP’s customers are established PSCs, but if it were to happen, the impact may not be fully reflected in its current share price and valuation.
“We downgrade our call on SAKP to Hold with a lower target price of RM2.55 (SOP-based, 13x implied PE) after adjusting down PE multiples in our SOP and cutting our crude oil average selling price (ASP) assumption to US$60/barrel for FY16-FY17.
“We also trim FY15 ASP to US$95/barrel from US$97/barrel previously thus adjusting our FY15 earnings down by 3%,” she said.
http://www.theedgemarkets.com
March 18, 2015 : 8:42 AM MYT
KUALA LUMPUR (March 18): AllianceDBS Research has downgraded SapuraKencana Petroleum Bhd (SAKP) to “Hold” at RM2.31 with a lower target price of RM2.55 (from RM3.25) and said there could be possible impairments of upstream assets in 4QFY15 but may be offfset by new gas reserves.
In a note today, analys Arhnue Tan said she views that SAKPmay make impairments of up to RM700 million in the upcoming 4QFY15 results as Newfield’s assets were purchased in FY14 when crude oil was above US$90/barrel.
“That said, the impairment is a non-cash item and impact may be muted as it could be offset by the inclusion of new gas reserves discovered in 2014,” she said.
Tan said a greater concern in the upcoming results would be if SAKP has to make allowances for trade receivables in the marine or drilling segments and in the worst case scenario, for the Petrobras contract.
“We see this as unlikely for now as the bulk of SAKP’s customers are established PSCs, but if it were to happen, the impact may not be fully reflected in its current share price and valuation.
“We downgrade our call on SAKP to Hold with a lower target price of RM2.55 (SOP-based, 13x implied PE) after adjusting down PE multiples in our SOP and cutting our crude oil average selling price (ASP) assumption to US$60/barrel for FY16-FY17.
“We also trim FY15 ASP to US$95/barrel from US$97/barrel previously thus adjusting our FY15 earnings down by 3%,” she said.
http://www.theedgemarkets.com
