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HLIB Research maintains Buy on SapuraKencana, trims target price to RM5.32

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HLIB Research maintains Buy on SapuraKencana, trims target price to RM5.32 Empty HLIB Research maintains Buy on SapuraKencana, trims target price to RM5.32

Post by Cals Fri 26 Sep 2014, 18:20

HLIB Research maintains Buy on SapuraKencana, trims target price to RM5.32
Business & Markets 2014
Written by theedgemalaysia.com   
Friday, 26 September 2014 08:28

KUALA LUMPUR (Sept 26): Hong Leong IB Research (HLIB) has maintained its Buy rating on SapuraKencana Petroleum Bhd with a lower target price of RM5.32 (from RM5.52) and said the company’s earnings were slightly below expectation.
In a note Friday, HLIB said SapuraKencana’s 1HFY15 core profit increased 64% year-on-year (y-o-y) and made up of 45% and 47% of HLIB and consensus full-year estimates, respectively mainly due to weaker fabrication business and slower activities from drilling division.
The research house said excluding reversal provision of RM63 million due to better performance from its older rigs and one-off gain of RM178 million arising from Newfield acquisition, SapuraKencans’s 1HFY15 core profit surged 64% y-o-y due to inclusion of Newfield assets but partly offset by slowdown in the FAB and HUC segments.
“Drilling division fell quarter-on-quarter as few rigs are out of job due to contract expiration. We understand that drilling business will be flat QoQ in 3Q and expect to perform better in 4Q.
“FY15 and FY16 earnings are reduced by 9% and 3% respectively after factored in lower job done for fabrication and drilling divisions.
“Maintain Buy call with target price reduced from RM5.52 to RM5.32 based on unchanged 20x FY01/16 EPS of 26.6 sen/share posted earnings changed,” it said.
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