SapuraCrest Petroleum Bhd
(Jan 6, RM4.58)
Maintain neutral at RM4.53 with a revised target price of RM4.60 (from RM3.90): SapCrest’s wholly-owned subsidiary TL Offshore S/B (TLO) has finalised, executed and formalised two separate contracts with Cosco (Nantong) Shipyard Co Ltd for the construction of two units of pipelay cum heavylift offshore construction vessels at a combined contract value of US$227 million (RM715 million). One of the vessels is scheduled to be delivered in 4QCY13 and the other vessel in 1QCY14.
To recap, TLO issued two separate letters of award for the abovementioned contract to Cosco on Sept 22 last year. The first vessel (hull number N449) and the second (with hull number N448) are set to cost US$117 million and US$110 million respectively. Both vessels are to be constructed, completed and delivered at the Cosco’s shipyard in China. The acquisition will be funded by internally generated fund and bank borrowings.
Currently, SapCrest jointly owns three heavylift cum pipelay vessels with its international partners (Subsea 7, Larsen & Toubro and Quippo) and two lay barges through Clough (the acquisition was completed recently on Dec 22, 2011). Besides the US$1.4 billion contract from Brazil’s state-controlled oil giant, Petróleo Brasileiro SA (Petrobras), TLO will also construct, charter and operate three pipe-laying support vessels (PLSV). Including the two new vessels to be built by Cosco, SapCrest will own 10 pipelay/lift vessels fleet by FY15, which is the largest in Malaysia. SapCrest’s market share in the domestic installation of pipelines and facilities (IPF) segment is more than 70% and 100% respectively for the shallow water and deepwater. Note that Global Industries, McDermott, Hyundai, Nippon Steel, Saipem and Swiber are its competitors locally.
Maintain “neutral”. We are raising our target price for SapCrest to RM4.60 (from RM3.90) which is at par with the offer price for its merger deal. Our target price implied 21 times PER12, which is about +1 standard deviation above its historical average since 2007. The proposed merger with Kencana Petroleum Bhd and the listing of Integral Key (SPV to facilitate the merger) is expected to be completed by 1QCY12. — MIDF Research, Jan 6
This article appeared in The Edge Financial Daily, January 9, 2012.
(Jan 6, RM4.58)
Maintain neutral at RM4.53 with a revised target price of RM4.60 (from RM3.90): SapCrest’s wholly-owned subsidiary TL Offshore S/B (TLO) has finalised, executed and formalised two separate contracts with Cosco (Nantong) Shipyard Co Ltd for the construction of two units of pipelay cum heavylift offshore construction vessels at a combined contract value of US$227 million (RM715 million). One of the vessels is scheduled to be delivered in 4QCY13 and the other vessel in 1QCY14.
To recap, TLO issued two separate letters of award for the abovementioned contract to Cosco on Sept 22 last year. The first vessel (hull number N449) and the second (with hull number N448) are set to cost US$117 million and US$110 million respectively. Both vessels are to be constructed, completed and delivered at the Cosco’s shipyard in China. The acquisition will be funded by internally generated fund and bank borrowings.
Currently, SapCrest jointly owns three heavylift cum pipelay vessels with its international partners (Subsea 7, Larsen & Toubro and Quippo) and two lay barges through Clough (the acquisition was completed recently on Dec 22, 2011). Besides the US$1.4 billion contract from Brazil’s state-controlled oil giant, Petróleo Brasileiro SA (Petrobras), TLO will also construct, charter and operate three pipe-laying support vessels (PLSV). Including the two new vessels to be built by Cosco, SapCrest will own 10 pipelay/lift vessels fleet by FY15, which is the largest in Malaysia. SapCrest’s market share in the domestic installation of pipelines and facilities (IPF) segment is more than 70% and 100% respectively for the shallow water and deepwater. Note that Global Industries, McDermott, Hyundai, Nippon Steel, Saipem and Swiber are its competitors locally.
Maintain “neutral”. We are raising our target price for SapCrest to RM4.60 (from RM3.90) which is at par with the offer price for its merger deal. Our target price implied 21 times PER12, which is about +1 standard deviation above its historical average since 2007. The proposed merger with Kencana Petroleum Bhd and the listing of Integral Key (SPV to facilitate the merger) is expected to be completed by 1QCY12. — MIDF Research, Jan 6
This article appeared in The Edge Financial Daily, January 9, 2012.
