Kencana Petroleum Secures Job in Gorgon Project
Our target price for Kencana remains unchanged at RM2.04 based on a calendarised PER of 16x FY11 EPS
Yesterday, Kencana announced that its 100%-subsidiary, Kencana HL SB, has secured purchase orders from oil and gas service company Saipem S.A, for the fabrication of LNG jetty and marine structures for Chevron Australia. This scope of the contract, which is part of the Gorgon project, comprises the provision of fabrication and supply of pre-assembled racks. The job, estimated at about RM166m, will be delivered in stages from 2QCY11 to 3QCY12.
Maintain Buy. Our target price for Kencana remains unchanged at RM2.04 based on a calendarised PER of 16x FY11 EPS. We mainly like the company’s delivery track record, even on the international arena. Also, it boasts a robust orderbook of about RM1.6bn and
tenderbook of over RM2.0bn. We think 2H10 would be an exciting quarter for the company as it is expecting the outcome of its bids for some new O&G fabrication contracts. Kencana remains one of our 3 top picks for the O&G sector besides Alam Maritim and Wah Seong.
by OSK Research
