Mar 31, 2010


The USD dominates
This week crude oil prices were strongly influenced by the release of the US jobless rate data, a stronger dollar, and rising stock levels – causing the price to fall slightly by 0.84%. Closer to home, there were mostly gainers with Dayang leading among stocks under coverage, rising 7.34% over the week. Petra Perdana, Wah Seong, and Sapura Crest also posted gains, while Petronas Gas and KNM saw downward pressure over the week.


News and views
During the week, SapuraCrest released its FY2010 results, which came in within expectations. Overall, we viewed the results to be a mixed bag as the turnaround story of SapuraAcergy was dampened by continued losses suffered at its marine division. A final net dividend of 4 sen was proposed and together with an interim net dividend of 3 sen already paid, total dividend came up to 7 sen for FY2010. We maintain our HOLD call for now with an unchanged target price of RM2.48, based on a 16x PE on FY11 EPS.

Also in the news last week was KNM’s decision of not extending BlueFire Capital Group’s exclusivity period for due diligence but  still aims to conclude talks in four weeks, raising speculation that a revised lower offer price could be made for the takeover. Meanwhile, Petra Perdana made the news again as it officially confirmed the removal of  Tengku Datuk Ibrahim Petra as CEO. In other news, Petronas is looking to team up with Australian firm, Santos Ltd., to bid for fellow Australian, Eastern Star Gas Ltd, to tap its reserves. According to sources, Eastern Star  is looking to commercialise its gas, including domestic sales and a new project is New South Wales. Finally, Kencana posted an increased net profit of 18% y-o-y, due to better management costs contributing to better margins. Furthermore, its RM250m Sukuk Mudharabah will be guaranteed by Danajamin Nasional with a rating of “AAA”, allowing  Kencana to raise funds at a competitive rate. The funds will be used to acquire at least three offshore support vessels.

Maintain Overweight

klse-oil-gas-stocks-list  above data: click to enlarge

source: ECMLibra research