Tuesday, October 4, 2011

RHB Research keeps market perform call on SapuraCrest

KUALA LUMPUR: RHB Research Institute is maintaining its Market Perform call on SapuraCrest Petroleum and fair value estimate of RM3.36 a share based on 14 times FY12 EPS.

On Monday, Oct 3, SapuraCrest announced its 50%-owned Labuan Shipyard & Engineering (LSE) had secured a RM99.5 million contract from Tanjung Offshore to build a 77-metre platform supply vessel. The vessel is expected to be completed within 21 months, which will contribute to Sapuracrest's FY13 earnings.

RHB Research said on Tuesday the contract would be LSE's first meaningful contribution to Sapuracrest since it was acquired in June.

"We note from its website that LSE does not have prior PSV building experience, but assuming it earns the same PBT margins as Nam Cheong (average of 13.4% for FY08-10), the project will contribute around RM6.6m to Sapuracrest's PBT earnings.

'Whilst the earnings accretion is immaterial we believe that the experience will be positive for LSE given that PSVs seem to be gaining favour in the offshore marine industry. We note that besides this Tanjung Offshore contract, Bumi Armada has also ordered two PSVs from Nam Cheong,' it said.

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