KLCI Stock - KENCANA / 5122 - 2010 Quarter 3

KENCANA PETROLEUM BERHAD

Listing Date: 15.12.2006
Market: MAIN
Sector: INDUSTRIAL
Par Value: 0.10
Major Industry: Construction
Sub Industry : Engineering & Contracting Services
Market Cap : 1657929777*1.49 = 2,470,315,367.73 (Medium)
NTA per share : (710934-36516)/1630501 = 0.41
P/BV : 1.49/0.41 = 3.63
Forecast P/E now : (1.49-0.005)/0.0764 = 19.44 (High)
ROE : 20.34% (High)
DY : 0.005/1.49*100 = 0.34% (Low)
Fixed Asset Turnover(3 year) : (0.8848+1.3634+1.8243)/3 = 1.3575(High)
Liquidity Ratio : 664948/423437 = 1.5704 (Low)
Receivables Collection Period : (227928+180123)/2/(1069605/365) = 69 days (Acceptable)
My Target Price : Not interested unless revenue and profit increase more
My Decision : NOT BUY
My Comment : Revenue remain low, profit decreasing, positive cash flow from CFF, above moderate debt but decreasing, navps increased
Technical Support Price : 1.26
Risk Rating : MODERATE
OSK Target Price : 2.06 (29 Jun 10)

KENCANA PETROLEUM BERHAD is a Malaysia-based investment holding company. The Company is engaged in providing engineering and fabrication services, as well as marine engineering and operations services businesses. Through marine engineering, it is involved in building, refurbishing, repairing and converting marine vessels. The Company provides offshore drilling services, as well as charter of vessels and rigs, through its operations service business. Its subsidiaries include Kencana HL Sdn. Bhd., Kencana Marine Sdn. Bhd., Kencana Metering Sdn. Bhd., Kencana Infrastructure Sdn. Bhd. and Kencana Steelworks Sdn. Bhd., among others. The principal activities of the subsidiaries include integrated engineering and fabrication of oil and gas production facilities and drilling rigs; operation and management of fabrication yard; metering works, process skid systems and pipeline construction, and property investment. On September 5, 2007, the Company acquired Kencana Petroleum Ventures Sdn. Bhd.

My study based on 2010 Quarter 3 report (number in '000):-
- Compared to the corresponding quarter ended 30 April 2009, revenue had decreased marginally by approximately 3% in the current quarter, mainly due to progress achieved for contracts in hand, which was in line with the project delivery schedule. Despite the decrease in revenue, profit before tax had gone up marginally by 4% mainly due to better margins recorded
- Profit before tax for the current quarter under review had gone down by 12%, as compared to the immediate preceding quarter. The decrease in profit before tax for the current quarter was mainly due to higher contract costs and operating expenses
- Estimate next 4Q eps after 2010 Q3 result announced = 0.0191*4 = 0.0764, estimate PE on current price 1.49 = 19.44(DPS 0.005)
- Estimate next 4Q eps after 2010 Q2 result announced = 0.02*4 = 0.08, estimate highest/lowest PE = 20.94/15.69 (DPS 0.005)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.0339*4 = 0.1356, estimate highest/lowest PE = 18.47/9.92 (DPS 0.005)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.1307, estimate highest/lowest PE = 19.09/16.03 (DPS 0.005)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.0324*4 = 0.1296, estimate highest/lowest PE = 17.32/12.77 (DPS 0.005)
- Estimate next 4Q eps after 2009 Q2 result announced = 0.0301*4 = 0.1204, estimate highest/lowest PE = 16.07/9.34 (DPS 0.005)

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