找不到输的理由: SKPETRO – Fundamental Analysis (23 Dec 2015)

2016年3月5日星期六

Fundamental Analysis as of FY16

FY16 Q3 Results Highlight:

SKPETRO’s 3QFY16 reported earnings declined by -62.7%yoy to RM129.9m. However, the apparent decline was largely due to a -RM317.3 provision made on its oilfields. Excluding the cumulative impairments of -RM776m on its oilfields as well as other provisions, SKPETRO’s normalised cumulative 9MFY16 earnings declined by -31.3%yoy to RM731m (compared to 9MFY15 normalised earnings of RM1.062b).
SKPETRO’s 9MFY16 operating cash flow more than tripled to RM2.2b from 6MFY16 largely due to more efficient working capital management. In addition, there were no net drawdowns on its credit line as of 9MFY16.
Sequential bottomline weakness (-37% QoQ) was apparent due to:
- lower rig utilisation of 75% (2QFY16: 82%)
- dip in oil price to USD48/bbl (2QFY16: USD66/bbl)
This was partially offset by:
- 2-fold increase in contribution from joint ventures, mainly due to deployment of a 4th PLSV to Brazil
- stronger USD vs MYR which boosted revenue by 3%
- strong showing by E&C, underpinned by international orders despite 50% yard utilisation
23 Dec 2015 – SKPETRO’s current orderbook as at 31 Oct 2015 stood at approximately RM21b. volume of orders slows down due to poor oil prices
SKPETRO conduct quarterly reviews (previous: annual) on oil price assumption and reserves for their O&G portfolio. This shows a good corporate governance

Valuation:

In my opinion, fair value of SKPETRO range from 1.7 to 1.9 (Uncertainty Risk: HIGH).
For more details, you can refer to my excel.

Going Forward:

Major concerns – Low crude oil selling price, weak orderbook replenishment, further asset writedowns, and reduced drilling fleet utilisation coupled with declining daily-charter-rates.
I will continue to hold and accumulate SKPETRO as I believe that SKPETRO will be able to overcome the challenges ahead.

At the time of writing, I owned shares of SKPETRO.

找不到输的理由