PP 7767/09/2010(025354)

2 September 2010
RHB Research
Corporate Highlights
Malaysia
Institute Sdn Bhd
A member of the
RHB Banking Group
Company No: 233327 -M

N ew s Updat e
2 September 2010
MARKET DATELINE

SapuraCrest Petroleum Share Price

Fair Value
:
:
RM2.34
RM2.41
Charters For T-6 And T-10 Drilling Rigs Recom : Market Perform
(Maintained)

Table 1 : Investment Statistics (SAPCRES; Code: 8575) Bloomberg: SCRES MK

Net Basic Adj. FD FD EPS FD Net
FYE Turnover Profit EPS EPS Growth PER C. EPS* P/NTA P/CF gearing GDY
Jan (RMm) (RMm) (sen) (sen) (%) (x) (sen) (x) (x) (x) (%)
2010 3,257.3 170.2 13.3 13.3 66.0 17.5 - 2.8 3.6 Net cash 2.6
2011f 3,824.8 215.3 16.9 16.9 26.5 13.9 17.0 2.3 8.3 Net cash 3.0
2012f 4,373.1 236.7 18.5 18.5 10.0 12.6 19.1 2.0 4.6 Net cash 3.0
2013f 4,653.1 249.1 19.5 19.5 5.2 12.0 23.3 1.8 4.3 Net cash 3.0
Main Market Listing / Non-Trustee Stock / Syariah-Approved Stock By The SC * Consensus Based On IBES Estimates

♦ New contracts for both rigs. Sapuracrest announced yesterday that two of Issued Capital (m shares) 1,276.7
its drilling rigs, the T-6 and T-10 that faced expiring contracts in FY10, have Market Cap (RMm) 2,987.5
been awarded new contracts. The T-6 was awarded a US$85m (RM269.5m) Daily Trading Vol (m shs) 2.0
52wk Price Range (RM) 1.62-2.58
28-month contract from existing client CPOC; while the T-10 was chartered
Major Shareholders: (%)
by Seadrill UK on bareboat basis for the duration of 24 months at a contract
Sapura Hldgs/related parties 40.3
value of US$49m (RM155.3m).
Seadrill 23.6
EPF 9.2
♦ T-6 rates sustained but T-10 rates are lower. The T-6 contract
FYE Jan FY11 FY12 FY13
translates to a charter rate of US$99k per day (slightly lower than the
EPS chg (%) - (1.9) (1.8)
previous US$101k day rates). However, the T-10 rates are now around
Var to Cons (%) (0.8) (2.9) (16.3)
US$65k; 29% less than the previous per day charter rate of US$92k. We
suspect this could be due to the new contract being on bare-boat basis PE Band Chart
rather then on a full service basis. The new T-10 charter rates are lower than
our assumed per day charter rates of RM104.1m per annum. PER = 20x
PER = 16x
PER = 12x
♦ Risks. 1) Rising costs of materials, labour and assets; 2) Potential margin PER = 8x

squeeze for the IPF division due to price competition for new contracts; 3)
Continued losses on the marine division; and 4) Delays in contracts due to a
review of the safety standards and designs of offshore facilities.

♦ Forecasts adjusted slightly. Given that the new drilling charter rates are Relative Performance To FBM KLCI
lower than our initial assumptions, we lower our FY01/12-13 revenue
forecasts slightly by 0.7-0.6% p.a. Our changes are only impacted in F12-13
as the contracts will take effect late-CY10. Consequently our FY12-13 EPS
forecasts fall by 1.9% and 1.8% respectively. SapuraCrest Petroleum

♦ Investment case. We reiterate that while SapuraCrest has a leading FBM KLCI
position in its business segments and will likely stand a strong chance of
being awarded new contracts under more robust market conditions, we are
still wary of the prevailing uncertain conditions in the oil and gas sector. We
trim our fair value to RM2.41/share (vs. RM2.46 previously) based on 13x
FY01/12 PER and maintain our Market Perform call on the stock.
Yap Huey Chiang
(603) 9280 2239
yap.huey.chiang@rhb.com.my
Please read important disclosures at the end of this report.

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 2 September 2010

Table 2. Earnings Forecasts Table 3. Forecast Assumptions

FYE Jan (RMm) FY10 FY11F FY12F FY13F FYE Jan FY11F FY12F FY13F
IPF 1,714.3 2,541.7 3,120.0 3,400.0 Division EBIT margin (%)
Drilling 844.3 771.1 741.2 741.2 IPF 7.5 7.5 7.5
Marine 646.1 483.9 483.9 483.9 Drilling 39.0 39.0 39.0
O&M 52.6 28.1 28.1 28.1 Marine 2.0 5.0 5.0
Revenue 3,257.3 3,824.8 4,373.1 4,653.1 O&M 13.0 13.0 13.0
Total 13.2 12.6 12.3
EBIT 362.4 504.7 550.9 571.9
EBIT margin (%) 11.1 13.2 12.6 12.3 Source: Company data, RHBRI estimates
Interest expense (45.2) 6.1 12.5 24.1
Associates 47.2 57.7 61.7 61.7
Pre-tax profit 364.4 568.4 625.0 657.7
Tax (31.2) (56.8) (62.5) (65.8)
Eff. tax rate (%) 8.6 10.0 10.0 10.0
Minorities (163.0) (296.3) (325.8) (342.8)
Net profit 170.2 215.3 236.7 249.1
Source: Company data, RHBRI estimates

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Industry/Sector Ratings

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