Tuesday, June 26, 2012

SKPetro ... Jun12

The construction of seven new vessels, two drilling rigs, two derrick lay vessels and three pipelay diving support vessels, is on track. The delivery of the new assets in CY14 will allow SKPetro to undertake larger and more complex jobs.

Armed with rm15 billion worth of existing contracts, the management was visibly upbeat about the prospects in Malaysia and Brzail.

The company has set its sights on rm12.5 billion worth of projects, not including potential new marginal field jobs. The company is bidding to another marginal field project with UK’s petrofac.

SKPetro offers attractive growth story from Berantai and swift fleet expansion. Earnings visibility is good given a solid and long term order book that will last up to FY2020.

Going forward, SapuraKencana is a strong contender for Malaysian O&G tenders in the pipeline.

Business as usual after Seadrill sells 300m shares; JV operations still gaining momentum.

Expect Petronas to award more contracts in 2H12 after delays in 1H12. SapuraKencana is a frontrunner for Petronas' inspection, repair & maintenance tender (RM900m) given its market lead via 100%-owned Allied Marine & Equipment.

It may also bid for Petronas' RM5bn and Shell's RM2bn hook-up & commissioning (HUC) tenders, expected to be awarded by year end 20120.

Its under-utilised fabrication yard in Lumut also makes it a prime candidate for more fabrication contracts amid the rising capex cycle. SapuraKencana is among the strongest candidates, if not the best, for these tenders because of its lead in the respective services.

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