BARAKAH (7251) : Barakah bids for projects worth RM400m-RM600m
Barakah Offshore Petroleum Bhd
(Nov 26, RM1.23)
Maintain “outperform” with target price of RM1.62: Barakah reported a core net profit of RM28.4 million for the period July 14 to Sept 14 which brought the 12-month 2014 (12M14) core net profit to RM62.4 million. This made up 85.4% and 79% of our full-year forecast and consensus forecasts (for a 15-month period) of RM73.1 million and RM79 million, respectively.
The result is above our and consensus expectations. The variance from our forecasts is due to higher billing from pre-commissioning works and the Pan Malaysia Transportation & Installation Package A projects.
Barakah’s 12M14 core net profit was restated by management for the one-off gain on disposal of subsidiary Vastalux Energy Bhd, one-off impairment loss on goodwill, initial public offering listing expenses, and bad debts written off.
Barakah-27Nov2014_theedgemarketsWe highlight that Barakah has changed its financial year ended to December from September effective Jan 14. Thus, our FY14 forecast is for a 15-month period from Sept 13 to Dec 14. Core net profit for the period July 14 to Sept 14 surged over 100% quarter-on-quarter on the back of a 60.3% increase in revenue and better margins.
The increase in revenue is mainly due to completion of two pre-commissioning works, and higher revenue recognised from ongoing T&I, engineering, procurement, construction and commissioning, and hook-up commissioning works.
Net margins grew +3.4pts, largely because the April 14 to June 14 period was besieged by higher mobilisation costs for their current projects.
For the Pengerang Pipeline project, pipes weren delivered in Nov 14, hence earnings recognition from 1Q15 is expected. There is still no news on the Arab Saudi T&I tender, but there is no sign of disqualification by the client.
Excluding the tender book for the Arab Saudi project, we understand that Barakah is actively bidding for RM400 million to RM600 million worth of projects. Management also hinted it is open to moving into the exploration and production space.
We trim our target calendar year 15 price-earnings ratio on Barakah to 12 times due to current sluggish crude oil prices, and Petronas’ cautionary statement on reviewing capex allocation for 2015. — Kenanga Research, Nov 26
http://www.theedgemarkets.com
Barakah Offshore Petroleum Bhd
(Nov 26, RM1.23)
Maintain “outperform” with target price of RM1.62: Barakah reported a core net profit of RM28.4 million for the period July 14 to Sept 14 which brought the 12-month 2014 (12M14) core net profit to RM62.4 million. This made up 85.4% and 79% of our full-year forecast and consensus forecasts (for a 15-month period) of RM73.1 million and RM79 million, respectively.
The result is above our and consensus expectations. The variance from our forecasts is due to higher billing from pre-commissioning works and the Pan Malaysia Transportation & Installation Package A projects.
Barakah’s 12M14 core net profit was restated by management for the one-off gain on disposal of subsidiary Vastalux Energy Bhd, one-off impairment loss on goodwill, initial public offering listing expenses, and bad debts written off.
Barakah-27Nov2014_theedgemarketsWe highlight that Barakah has changed its financial year ended to December from September effective Jan 14. Thus, our FY14 forecast is for a 15-month period from Sept 13 to Dec 14. Core net profit for the period July 14 to Sept 14 surged over 100% quarter-on-quarter on the back of a 60.3% increase in revenue and better margins.
The increase in revenue is mainly due to completion of two pre-commissioning works, and higher revenue recognised from ongoing T&I, engineering, procurement, construction and commissioning, and hook-up commissioning works.
Net margins grew +3.4pts, largely because the April 14 to June 14 period was besieged by higher mobilisation costs for their current projects.
For the Pengerang Pipeline project, pipes weren delivered in Nov 14, hence earnings recognition from 1Q15 is expected. There is still no news on the Arab Saudi T&I tender, but there is no sign of disqualification by the client.
Excluding the tender book for the Arab Saudi project, we understand that Barakah is actively bidding for RM400 million to RM600 million worth of projects. Management also hinted it is open to moving into the exploration and production space.
We trim our target calendar year 15 price-earnings ratio on Barakah to 12 times due to current sluggish crude oil prices, and Petronas’ cautionary statement on reviewing capex allocation for 2015. — Kenanga Research, Nov 26
http://www.theedgemarkets.com
