SKPetro: A New Chapter for SKPetro!

Result Update

For QE30/4/2014, SKPetro's net profit increased by 51% q-o-q or 444% y-o-y to RM509 million while revenue increased by 30% q-o-q or 51% y-o-y to RM2.44 billion.

Revenue & PBT jumped due to the inclusion of SapuraKencan Energy Inc. Group ('SKEI') business' financial results subsequent to the completion of its acquisition on Feb 11, 2014. SKEI (formerly known as Newfield Malaysia Holding Inc.) was acquired by SKPetro for USD896 million (or RM3.0 billion). The acquisition was completed in February 2014. 

The group also recognized RM177.8 million gain on acquisition of SKEI business during the quarter. If this one-off gain is adjusted, SKPetro's net profit would actually drop 2% q-o-q or rose 253% y-o-y to RM332 million (assuming the gain is not subject to tax).


Table: SKPetro's last 8 quarterly results


Chart 1: SKPetro's last 12 quarterly results

Valuation

SKPetro (closed at RM4.33 yesterday) is now trading at a trailing PE of 19.7 times (based on last 4 quarters' EPS of 22 sen). Most analysts are valued SKPetro at a forward PE of 24-25 times its 2015F earning. On that basis, SKPetro's fair value would be about RM5.00. (Note: TA valued SKPetro at RM5.98 while CIMB valued it at RM7.00.)

Technical Outlook

SKPetro is still in an uptrend line with support at RM4.00. Immediate resistance level is RM4.35 and then at RM4.75.


Chart 2: SKPetro's weekly chart as at June 19, 2014 (Source: Tradesignum)
 
Conclusion

Based on good financial performance, exciting prospects & positive technical outlook, SKPetro is still a good stock for long-term investment.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, SKPetro.