by winston » Sat Oct 11, 2014 7:10 am
vested
April 11, 2014
SapuraKencana Petroleum Bhd
By AmResearch
Buy (maintained)
Fair value: RM5.70
AMRESEARCH said it maintained a “buy” recommendation on SapuraKencana, with an unchanged fair value of RM5.70 per share, based on financial year 2015 price/earnings (PE) of 22 times, which was the 2007 peak achieved by Kencana Petroleum.
It said it maintained SapuraKencana’s financial year ending Jan 31, 2015 (FY15) to FY17 forecast, which would not be affected by changes in shareholder stakes.
Seadrill Ltd has placed out 230 million SapuraKencana shares at RM4.30 per share, valued at RM989mil, which will reduce Seadrill’s stake in SapuraKencana from 12% to 8%.
Seadrill chairman and major shareholder John Fredriksen has said his company, which entered into a lock-up agreement for its remaining stake in SapuraKencana, would remain as a long-term strategic investor in the group.
AmResearch believed that should Seadrill eventually dispose of its entire stake in SapuraKencana, it would be gradual given that Seadrill had a strong business relationship with the group via 50:50 joint ventures in six pipe-laying flexible support vessels, each potentially worth US$300mil, which have been chartered to Brazil’s Petrobras.
According to Fredriksen, Seadrill is currently exploring other business ventures with SapuraKencana. Fredriksen is currently an alternate director to Tor Alav Troim, who is a board member of SapuraKencana.
Following this share sale, Seadrill will be the fourth largest shareholder in the group after Sapura Holdings (16.8%), the Employees Provident Fund (11.7%) and Khasera Baru (10%).
AmResearch said the changes in shareholder levels did not affect its positive outlook on SapuraKencana’s prospects given the group’s game-changing and earnings-transforming US$898mil (RM2.8bil) acquisition of Newfield International’s oil and gas production blocks in the peninsula, Sabah and Sarawak.
As SapuraKencana was poised to become a truly formidable regional oil and gas upstream operator, AmResearch said its share price had outpaced the FBM KLCI by 13% over the past 12 months.
However, AmResearch said SapuraKencana’s aggressive acquisitive earnings acceleration (107% in FY14 and 59% in FY15 forecast) translated to a still attractive FY15f PE of 16 times currently — a 45% discount to SapuraCrest Petroleum’s peak of 29 times in 2007.
Source: The Star
It's all about "how much you made when you were right" & "how little you lost when you were wrong"