Buy' calls on SapuraKencana

KUALA LUMPUR: SapuraKencana Petroleum Bhd's shares were among the active stocks traded this morning as the company posted a bullish financial year (FY) ended Jan 31, 2014 yesterday.

As at 9.53 am, the integrated oil and gas company's shares rose four sen to RM4.34 with 624,100 lots changing hands.

The integrated oil and gas company recorded a higher pre-tax profit of RM1.2 billion during FY14, up from RM829.8 million in the preceding year.

Revenue rose to RM8.4 billion from RM6.9 billion a year ago, the company said in its filing to Bursa Malaysia on Monday.

However, two research firms, HwangDBS Vickers Research and Hong Leong Investment Bank (HLIB), said the results came below expectations.

HwangDBS said the lower-than-expected earnings came on the back of lower revenue from its offshore construction division which contributed to the 21 per cent quarter-on-quarter (q-o-q) fall in fourth quarter FY14 revenue to RM1.88 billion.

It was also due to lower revenue from offshore construction and subsea services' pre-tax profit which plunged 88 per cent q-o-q to a mere RM19 million following the completion of Pan Malaysia contracts during the quarter, it added.

Going forward, HLIB said SapuraKencana's order book of RM25.4 billion will also provide strong earnings visibility over the next few years.

"We remain upbeat on its prospects in Malaysia as its integrated services offering should enable it to be among the strongest candidates to capitalise on Petronas' heavy capital investment to increase hydrocarbon production," HLIB said.

Both research houses have maintained their "buy" call on SapuraKencana with unchanged target price of RM4.92 and RM5.90, respectively.