Eye On Stocks - Kencana

by **hlk** Sat 11 Jun 2011, 10:01

KENCANA Petroleum Bhd is one of the main beneficiaries of the oil and gas investment up-cycle in Malaysia, with analysts saying the company is likely to hit a record-breaking year in terms of its financial performance, hence the uptrend of its share prices of late.

The provider of integrated engineering and fabrication of production facilities services to the oil and gas industry has secured several crucial contracts since the year started.

These include a 25% portion of the US$800mil Berantai marginal field contract awarded by Petroliam Nasional Bhd in January; a RM216mil contract from Petrofac (Malaysia-PM304) Ltd for the engineering, procurement and construction of two units wellhead platforms for Cendor Phase 2 Development Project off the cost of Terengganu in March; and a RM208mil contract from Kebabangan Petroleum Operating Co Sdn Bhd for the fabrication of the substructure for the Kebabangan Northern Hub development project off the coast of Sabah in April.

Analysts believe the company will secure more upcoming contract awards given its proven track record.

The Perak state government had said it would give priority to Kencana to facilitate the company's expansion. Kencana, which is led by group CEO Datuk Mokhzani Mahathir, had said the company was looking at acquiring additional land to expand its fabrication yard.

Kencana's net profit for the second quarter ended Jan 31, 2011, grew 56.69% compared with the corresponding quarter a year ago to RM50.60mil largely due to progress achieved for contracts in hand and better management of relevant costs, as well as contributions from drilling services.

Its revenue surged 40.91% in the quarter under review to RM352.49mil.