SapuraKencana Petroleum - Newfield in the new year
Date:
2014-01-07
Firm:
CIMB
Stock:
Price Target:
6.73
Price Call:
BUY
Last Price:
0.03
Upside/Downside:
+6.70 (22333.33%)
Target RM6.73 (Stock Rating: ADD)
In FY14, SapuraKencana will cement its upstream presence with its Newfield acquisition, which comes hot on the heels of its Seadrill purchase. Armed with Newfield and Seadrill, SapuraKencana is set to record a new net profit high in the new year.
Our target price rises as we now value the stock at 22.5x CY15 P/E, a 40% premium over implied market P/E of 16.1x, but still within the historical P/E range of the oil & gas big caps. The ongoing Newfield deal is the potential re-rating catalyst that supports our Add recommendation, which changes from Outperform under our revised rating structure. SapuraKencana is our top pick among the oil & gas big caps.
Having a (New)field day
On 22 Oct 2013, SapuraKencana announced its acquisition of 100% equity interest in Newfield Malaysia Holdings for US$898m cash. We are upbeat about the purchase as it will catapult the company, already one of the world's five biggest oil & gas service providers by market capitalisation, into the exploration and production segment. The acquisition will also cement SapuraKencana's presence in the upstream business. Post-acquisition, the company will be the fourth-largest oil & gas producer in Malaysia after Petronas, Shell and Exxon. The acquisition is expected to be finalised by Apr 2014.
China beckons?
SapuraKencana has expressed its interest in Newfield's assets in China and plans to participate in the tender process when the assets are put up for sale again. The sale of the assets was delayed due to equipment failure at one of the two fields. We think that SapuraKencana may have an advantage over the other potential competitors as the assets in China were managed by the Newfield team in Malaysia.
Drilling into new markets
SapuraKencana's US$2.8bn rig integration with Seadrill was completed on 30 Apr 2013. The company's enlarged rig business now consists of 24 rigs, making it the world's largest tender rig operator, with a 56% share of the market. Most of its rigs are now deployed in Southeast Asia. However, the company aims to deploy its rigs in Brazil, West Africa, India and Australia in the next three to five years.
Source: CIMB Daybreak - 07 January 2014, Full PDF Report
In FY14, SapuraKencana will cement its upstream presence with its Newfield acquisition, which comes hot on the heels of its Seadrill purchase. Armed with Newfield and Seadrill, SapuraKencana is set to record a new net profit high in the new year.
Our target price rises as we now value the stock at 22.5x CY15 P/E, a 40% premium over implied market P/E of 16.1x, but still within the historical P/E range of the oil & gas big caps. The ongoing Newfield deal is the potential re-rating catalyst that supports our Add recommendation, which changes from Outperform under our revised rating structure. SapuraKencana is our top pick among the oil & gas big caps.
Having a (New)field day
On 22 Oct 2013, SapuraKencana announced its acquisition of 100% equity interest in Newfield Malaysia Holdings for US$898m cash. We are upbeat about the purchase as it will catapult the company, already one of the world's five biggest oil & gas service providers by market capitalisation, into the exploration and production segment. The acquisition will also cement SapuraKencana's presence in the upstream business. Post-acquisition, the company will be the fourth-largest oil & gas producer in Malaysia after Petronas, Shell and Exxon. The acquisition is expected to be finalised by Apr 2014.
China beckons?
SapuraKencana has expressed its interest in Newfield's assets in China and plans to participate in the tender process when the assets are put up for sale again. The sale of the assets was delayed due to equipment failure at one of the two fields. We think that SapuraKencana may have an advantage over the other potential competitors as the assets in China were managed by the Newfield team in Malaysia.
Drilling into new markets
SapuraKencana's US$2.8bn rig integration with Seadrill was completed on 30 Apr 2013. The company's enlarged rig business now consists of 24 rigs, making it the world's largest tender rig operator, with a 56% share of the market. Most of its rigs are now deployed in Southeast Asia. However, the company aims to deploy its rigs in Brazil, West Africa, India and Australia in the next three to five years.
Source: CIMB Daybreak - 07 January 2014, Full PDF Report
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blugz83
Good kick start for 2014...? Skpetro getting more contract.
2014-01-29 22:03