SKPETRO – Fundamental Analysis (18 Jun 2015)

SKPETRO Analysis:-

Excel – http://1drv.ms/1LkdUTN

Notes – http://tinyurl.com/nagx3x2

My View:-

  • Valuation:
    • Absolute EY%:
      • Trailing:
        • FY15 (EPS: 0.193) – From 4.37 to 4.94 (Uncertainty Risk: LOW)
        • R4Q (EPS: 0.198) – From 4.49 to 5.08 (Uncertainty Risk: LOW)
      • Forward:
        • FY16 (EPS: 0.18) – From 4.08 to 4.61 (Uncertainty Risk: LOW)
        • FY17 (EPS: 0.195) – From 4.41 to 4.99 (Uncertainty Risk: LOW)
      • EPS applied to reach the current stock price (2.51): 0.108
    • Simple Yield Valuation:
      • FY15-EY%: 9.5%
      • FY15-DY%: 0%
      • R4Q-EY%: 7.9%
  • 16 Jun 2015 – SKPETRO’s current orderbook stands at RM24.5b. The company noted that out of the outstanding orderbook, approximately RM6.4b will be executed and recognised in FY16, RM5.1b in FY17 and RM13b in FY18 onwards.
  • 17 Jun 2015 – “The group’s order book of RM5 billion to be recognised for next year represents only 50% of our yearly capacity, so we still need to go out and win another half of it. If we want to maintain at least the same kind of performance, we need to acquire at least RM6 billion worth of works [for] this year and the next in order to maintain the same turnover”
  • Valuation of SKPETRO is very attractive as the company’s locked-in order book remains solid and that its oil fields are still in the black.
  • In FY15, SKPETRO FY15 normalised earnings rose by 6% yoy to RM1,154m
  • The DES and Fab & HUC segments registered topline growth with the exception of OCSS segment. DES segment remains as the key contributor with almost equal PBT contribution from Energy and Drilling.
  • The company has locked-in approximately >RM7b worth of jobs to be executed for FY16. Including revenue contribution from the Energy segment (approximately RM2b per year) and excluding joint-venture project portions, SKPETRO will still need to replenish and execute >RM2b worth of jobs in FY16 to at least match the normalised earnings achieved in FY15.
  • The weak global crude oil price and coupled with Petronas’ capex cut are still the key risks in FY16.
  • 11 May 2015 – SapuraKencana bags six contracts worth up to US$269m overseas in four different countries
  • 16 Jun 2015 – SKPETRO may be seeing its fabrication yard utilisation rate drop up to 30% next year
  • I will hold and continue to accumulate SKPETRO.

Latest Financial – Q1 2016 Financial Report (15 Jun 2015) http://www.bursamalaysia.com/market/listed-companies/company-announcements/4772849

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

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