SKPETRO – Fundamental Analysis (10 Dec 2014)

SKPETRO Analysis:-

Excel – http://1drv.ms/1ukfATE

Notes – http://tinyurl.com/ofcwwjx

My View:-

– Fair Value:
  – 3-Y DCF:
    – Base Scenario: 4.21 (Fair Value Uncertainty: LOW)
    – Good Scenario: 4.58 (Fair Value Uncertainty: LOW)
    – Bad Scenario: 3.87 (Fair Value Uncertainty: LOW)
    – Ugly Scenario: 3.56 (Fair Value Uncertainty: LOW)
  – Absolute PE:
    – FY14 (EPS: 0.189) – Fair value 2.31 (Fair Value Uncertainty: HIGH)
    – R4Q (EPS: 0.274) – Fair value 3.34 (Fair Value Uncertainty: MEDIUM)
  – Absolute EY%:
    – Trailing:
      – FY14 (EPS: 0.189) – Fair value 7.08 (Fair Value Uncertainty: LOW)
      – R4Q (EPS: 0.274) – Fair value 10.25 (Fair Value Uncertainty: LOW)
    – Forward:
      – FY15 (EPS: 0.239) – Fair value 8.95 (Fair Value Uncertainty: LOW)
      – FY16 (EPS: 0.255) – Fair value 9.57 (Fair Value Uncertainty: LOW)

    – EPS applied to reach the current stock price (2.45): 0.065
  – I won’t use Absolute EY% for this case because the valuation is too optimistic. 3-Y DCF and Absolute PE indicates that SKPETRO is undervalued.
-  I am positive on SapuraKencana for its strong quality and well diversified orderbook, healthy earnings and consistent job wins.
– Many people asked me whether we should buy O&G counters now. I consider SKPETRO as part of my value investing portfolio. In my opinion, I think this is good time to accumulate O&G counters. Remember the Warren Buffett’s most famous investment sayings: "Be fearful when others are greedy. Be greedy when others are fearful."

Latest Financial – Q3 2015 Financial Report (9 Dec 2014) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1820653

At the time of writing, I owned shares of SKPETRO.

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6 thoughts on “SKPETRO – Fundamental Analysis (10 Dec 2014)

  1. Hi LC,

    I’m still new with O&G field.Based on the financial reports, which are giving the most profitable income (upstream, midstream or downstream)? Since SKP are in diverse O&G services

    Like

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