FW: AmBank Research - Sapura Energy: Re-rating with fresh EPCIC jobs and E&P prospects BUY, 29 Mar 2018

 

 

STOCK FOCUS OF THE DAY

Sapura Energy: Re-rating with fresh EPCIC jobs and E&P prospects                                                                           BUY

 

We maintain our BUY recommendation on Sapura Energy (Sapura) with an unchanged fair value of RM1.00/share based on a lower 40% discount (from an earlier 50%) to our revised FY19F book value with the inclusion of the RM2.1bil impairments of rigs and vessels in 4QFY18.

 

Sapura’s FY18 normalised loss of RM243mil (excluding impairments and unrealised forex loss) was within our expectations, but worse than consensus. However, we have cut FY19F loss by 70% and reversed our FY18F loss to a net profit of RM118mil from: (1) a 12%-13% reduction in our depreciation assumptions due to the substantive asset impairments; and (2) US$5/barrel increase in crude oil prices for FY19F-FY20F and 5% increase in production for FY19F and flat for FY20F with the commencement of SK310 B15 field late last year.

 

Sapura, which has a 30% stake in a consortium with DEA (40%) and Premier Oil (30%), just secured Block 30 in the Sureste Basin and Blocks 11 and 13 in the Burgos Basin, Gulf of Mexico in Mexico’s Round 3.1 bidding exercise. Together with the recent farm-in agreements to 5 offshore exploration permits in Taranaki Basin, New Zealand, the proposed listing of Sapura’s E&P operations will reignite its re-rating process given an unjustified PBV of 0.3x currently vs. 0.9x for Bumi Armada.

 

 

Others :

Astro Malaysia: Beating the odds like Astro Boy                                                                                                                 BUY

Titijaya Land: Acquiring 6.8-acre land in Jalan Ampang area                                                                                           BUY

V.S.Industry: Keurig models grind to a halt, but prospects still bright                                                                        BUY

 

 

 

QUICK TAKES

BIMB: Insurance subsidiary's earnings likely to be strong due to bancatakaful strategic tie-ups                    BUY

UMW Holdings: UMW extends offer period for PERC to April 30                                                                                HOLD

 

 

ECONOMIC HIGHLIGHT

Malaysia: Bank Negara Annual Report 2017

 

 

NEWS HIGHLIGHTS

Oil & Gas Sector: Petronas and Saudi Aramco set up two Rapid joint ventures

DKLS: Bags RM102m is water transfer scheme contract from govt

OCK: Teams up with ISCO for Philippines venture

IPO: Techbond gets green light for Main Market listing

 

 

 

DISCLAIMER:

The information and opinions in this report were prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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