SapuraKencana shares jump 12 sen after strong results in the second quarter

The Star Online: 2 October 2013

PETALING JAYA: Investors cheered SapuraKencana Petroleum Bhd’s improved second-quarter results by pushing up the stock by 12 sen to RM3.81 at market close as analysts issued strong “buy” calls on the oil and gas (O&G) company.

A total of 14.06 million shares changed hands.

On Monday, the group announced a net profit of RM410.5mil for its second quarter ended July 31, 2013, representing a 132.6% gain compared with RM176.5mil for the same quarter last year.

It told Bursa Malaysia that the increase was due to higher contribution from its drilling and energy services business.

Its first-half net profit rose to RM504.1mil, compared with RM218.2mil a year ago. Revenue was also up to RM2.49bil from RM2.06bil during the same quarter.

The group expects upstream capital spending in the O&G sector to remain bullish at regional and global levels.

“As a geographically diversified group, SapuraKencana remains well-placed to benefit from the expected outlay and will continue to strategically grow its businesses,” it said in a statement.

Analysts are maintaining their strong “buy” calls on the company due to its strong order book momentum and more marginal field opportunities.

CIMB Research has raised its target price on the company to RM5.60 from RM4.80 previously, on expectations of early contribution from SapuraKencana’s Berantai marginal field.

“While we are thrilled by SapuraKencana’s first half performance, we expect the second half to be more exciting.

“Management surprised us with news that the Berantai marginal field is set to post its maiden profits in the third quarter of 2014, a quarter earlier than expected,” it said.

Furthermore, the group intends on expanding its order book, said AmResearch. “Despite the sheer size of its existing order book, SapuraKencana is currently tendering for new contracts potentially worth RM25bil,” it added. SapuraKencana is also looking to move up the value chain and has submitted several bids to operate or acquire upstream assets in Malaysia.

“We continue to like SapuraKencana as its unrivalled integrated offshore services will naturally place it among the frontrunners in the bidding of mega projects in Malaysia as well as in the overseas market,” said Hwang-DBS Vickers Research. Last Friday, the company launched its first pipe-laying vessel, Sapura Diamante, in Brazil.

The 550-tonne vessel is the first in a series of six fully integrated offshore vessels to be used to develop deep-sea oilfields in Brazilian waters on behalf of Brazil’s Petroleo Brasileiro.