SapuraCrest Petroleum - BUY - TP 1.90

2QFY10 results in line
􀂃 SapCrest’s reported 1HFY10 (Jan) net profit of MYR78 mln (+48.7% YoY) was in line with our expectations, making up 49% of our FY10 earnings forecast.
􀂃 The better QoQ performance (net profit of MYR52 mln up 104% QoQ) was due to a substantial increase in revenues from the installation of pipelines and facilities
(IPF) division. Operating margins improved slightly to 11.8% (+0.7%-pt QoQ), led mainly by respective volume efficiency and pricing benefits at the IPF and drilling
divisions.
􀂃 The +63% YoY growth was fuelled by higher contributions from TL Offshore, thanks to increased IPF activities in the quarter, as well as the reversal of associate losses at SapCrest’s joint-venture SapuraAcergy. Drilling profits expanded 33.5% YoY, despite revenues staying relatively flat, as SaprCrest’s new, higher day rate drilling contracts for tender-rigs T-9 and Teknik Berkat kicked in.
􀂃 SapCrest’s orderbook, currently at MYR7 bln, should underpin earnings visibility well into FY11. We expect continuing strong contributions from the IPF business
as billings from the Gemusut-Kakap offshore work increases. With its MYR3 bln transportation and installation of offshore facilities contract with Petronas coming
to an end in March 2010, we expect more news flow on the renewal of this contract to emerge towards end-2009.

Recommendation & risk
Despite there being no changes to our earnings estimates, we cut our call on SapCrest’s to Buy (from Strong Buy), due the reduced upside to our unchanged 12-month target price of MYR1.90.
The outlook for the oil & gas services sector has improved, with the rise in oil prices to the USD70/bbl level from USD47/bbl in March. Although we believe that most oil & gas budgets are based on long-term supply/demand factors, the higher prices do help reduce the risk of additional project delays and curbed marginal field activity. These should help support drilling rig and other services day rates. Our 12-month target price of MYR1.90 is based on a combination of the company's estimated is counted cash flow and relative values (10x calendar 2010 EPS).
At our target price, SapCrest would trade at 14x fully diluted calendar 2010 EPS estimate, at a premium to its Malaysian peers (now averaging around 9.5x 2010 EPS). We believe SapCrest’s premium to the sector is warranted, given its asset profile, strong growth prospects to FY11 and its ability to participate in deep-water developments.
Risks to our recommendation and target price include a prolonged period of weakness in oil prices, which will have in impact on capex spending by the oil majors. In addition, the company’s earnings could be subject to weather- and execution-related risks, while a weakening USD could translate to a lower-than expected EPS for SapCrest.

沙布拉浪峰（SAPCRES,8575,主板貿服組）截至2009年7月31日為止的半年凈利激揚48.74%至7802萬2000令吉，比較前期為5245萬5000令吉，主要歸功於油管裝置及相關設施和岸外鑽機業務的拉抬。

沙布拉浪峰公佈最新業績也顯示，半年營業額上揚10.09%至17億4775萬6000令吉，比較去年同期為15億8757萬9000令吉，主要拜所有的部門業務活動都增溫。

沙布拉浪峰也宣佈每股3仙的中期股息，預定在今年11月9日支付，享息股東是根據今年10月12日的存票注冊。
沙布拉浪峰次季凈利勁揚63.12%至5236萬2000令吉，比較去年同季度為3210萬令吉，托油管裝置及相關設施和岸外鑽機業務拉動之福。

次季的營業額則彈升14.22%至10億3157萬3000令吉，比較前期為9億零313萬3000令吉。
若無意外，集團董事部預計截至2010年1月31日為止財政年的財報表現令人滿意。