SapuraKencana SKPETRO stock price plunged 13.8% to RM 1.91 on second day trading due to weak sentiment for the oil and gas counters, Affin IB Research believes Malaysia's Oil and Gas industry is still in a capex upcycle and SapuraKencana is the best proxy to ride the capex upcycle

(SKPETRO closing stock price today (18.5.2012) was RM 1.96)

Shares of SapuraKencana Petroleum Bhd extended its decline for the second day on Friday, falling to a low of RM1.91 earlier, as sentiment for the oil and gas counters was dampened by the weakened markets.

At 3.16pm, it was down 17 sen to RM1.93. There were 39.52 million shares transacted.

Since its debut on Thursday, SapuraKencana, a newly merged entity between SapuraCrest Petroleum and Kencana Petroleum, is down 31 sen or 13.8% from its reference price of RM2.24.

The FBM KLCI fell 15.53 points to 1,528.68. Turnover was 685.37 million shares valued at RM865.07mil. Declining counters beat advancers 725 to 73 while 199 counters were unchanged.

Affin Investment Bank Research had initiated coverage on SapuraKencana Petroleum with a BUY rating and target price of RM2.65, based on 18 times CY13 earnings.

The research house said it liked SapuraKencana for its integrated business model with EPCIC capabilities across O&G value chain; extensive O&G asset base to support business operations and a strong management team with proven project track record.

Other positive factors were a growing global footprint; 16% earnings CAGR over FY12-15E.

It also said the company. with a market cap of RM11.2bil and free float of 44%, it was likely to be included as a FBM KLCI component stock upon its review in end-2012; and importantly, it believes Malaysia's O&G industry is still in a capex upcycle and SapuraKencana is the best proxy to ride the capex upcycle.

Source: www.thestar.com.my

Here are two recent posts on SapuraKencane over the past weeks

8 May- Kencana Petroleum awarded fabrication contract worth at least RM 460 million from Murphy Sarawak Oil

24 April- Kenanga Research positive on merged Sapura Kencana with target price of RM 2.63 (Outperform)

SapuraKencana Petroleum stock price fell 14 sen on first day listing to RM 2.10 from reference price of RM 2.24

(SKPETRO closing stock price today (17.5.2012) was RM 2.10)

SapuraKencana Petroleum Bhd, Malaysia’s second-largest oil and gas services provider, fell on its Kuala Lumpur debut, a day after Asian stocks slumped the most this year amid mounting concern over international fallout from Europe’s debt crisis.

The stock dropped 6.3 per cent to RM2.10 from its reference price of RM2.24 at the close, compared with a 0.5 per cent gain in the benchmark FTSE Bursa Malaysia KLCI Index. It was the most active stock with 206 million shares traded. The MSCI Asia Pacific Index slid 2.5 per cent yesterday as Greece’s move to call new elections increased concern it will leave the euro and derail efforts to contain the region’s financial problems.

“For the past week, market sentiment hasn’t been that good basically due to the worries on the Europe side,” Teh Kian Yeong, an analyst at K&N Kenanga Holdings Bhd, said by phone in Kuala Lumpur today. “This is a stock we actually like. After the merger, their earnings growth is stronger and their balance sheet is stronger as well.”

The Kuala Lumpur-based group was formed through the RM11.9 billion merger between SapuraCrest Petroleum Bhd and Kencana Petroleum Bhd Before the merger, the companies won rights to jointly develop their first oilfield off Malaysia’s eastern coast with Petrofac Ltd. By joining forces, they want to bid for larger contracts and further expand into exploration.

This comes after Malaysia said it would offer tax incentives to encourage the development of unviable marginal oil and gas fields to boost the Southeast Asian nation’s energy reserves.

With a market value of RM10.5 billion, SapuraKencana is now Malaysia’s second-biggest listed oil and gas services provider after Bumi Armada Bhd.

Kenanga rates SapuraKencana outperform with a price estimate of RM2.63, according to data compiled by Bloomberg. This means the stock’s total return is expected to exceed 10 per cent over 12 months, Teh said.

SapuraKencana, which has an order book of RM13.5 billion, is bidding for RM7 billion of contracts overseas and at home, Group Chief Executive Officer Shahril Shamsuddin said yesterday. It has allocated US$1.5 billion for capital expenditure over three years for new drilling rigs and pipe-laying vessels, he said. -- Bloomberg

Source: www.btimes.com.my

Kencana Petroleum awarded fabrication contract worth at least RM 460 million from Murphy Sarawak Oil

Kencana Petroleum Bhd has received a letter of award from Murphy Sarawak Oil Co., Ltd. for the fabrication of offshore topsides and the contract is valued between RM460mil and RM474mil.

It said on Tuesday Murphy Sarawak awarded the contract on April 20 for the provision of engineering, procurement, construction and commissioning (EPCC) of Serendah Production topsides facilities at the oil fields development off Bintulu, Sarawak.

"The value of the contract is estimated at between RM460mil and RM474mil. The contract is expected to be delivered from first quarter of calendar year 2013 to second quarter of calendar year 2013," it said.

Kencana expected the contract to contribute positively to the earnings and net assets per share of the group for the duration of the contract.

Source: www.thestar.com.my

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

Source: www.btimes.com.my