24 April 2012
Kenanga Research positive on merged Sapura Kencana with target price of RM 2.63 (Outperform)
Kenanga Research started Malaysia’s Sapura Kencana Petroleum Bhd with an "outperform" call, seeing the group positively with its enlarged scale and global track record after the merger.
Sapura Kencana is an entity to be formed upon the planned merger of oil and gas services firms Sapuracrest Petroleum Bhd and Kencana Petroleum Bhd.
“We are positive on the newly merged entity as we believe it has the necessary scale and track record to lift it beyond just being a local oil and gas service player,” Kenanga said in a research note on Tuesday.
The broker pegged Sapura Kencana a target price of RM2.63 a share.
It said the new entity, which was expected to be relist in mid-May, will be offered at a price closer to RM2.20 a share based on the current share price of Kencana at RM3.35 and Sapuracrest at RM5.05.
“At this juncture, Sapuracrest is the more attractive entry point into the merged entity with an upside of 17.9 percent as compared with Kencana’s upside of 15.9 percent,” said Kenanga. -- Reuters