Analysts value Carimin Petroleum between RM1.07 and RM1.35

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KUALA LUMPUR (Oct 29): The soon-to-be listed onshore and offshore hook up and commissioning (HUC) services provider Carimin Petroleum Bhd (Carimin) has been valued at between RM1.07 and RM1.35, as compared with its initial public offering issuing price of RM1.10.

Maybank IB Research has valued Carimin at RM1.35 with its forward earnings underpinning by the five-year RM899 million Peninsular Malaysia HUC project.

In a special report today, Maybank IB Research analyst Tee Sze Chiah said earnings are on the uptrend due to expanding margins on ownership of vessels and the absence of minority interest.

“Based on CY15F earnings per share of 11.3sen, we derive an indicative fair value of RM1.35 for Carimin, pegging it to a CY15 price-earnings ratio of 12 times, consistent with our valuation for the other O&G stocks and after considering its market cap. This offers an upside potential of 23%,” Tee said.

He noted that the projection of a 26% two-year (FY6/14-16) earnings per share compound annual growth rate was underpinned by the five-year RM899 million Peninsular Malaysia HUC project and margins expansion.

Meanwhile, RHB Research analyst Kong Ho Meng said it has valued Carimin to its closest listed peers and arrived at its target price of RM1.07 by ascribing a 10% discount to the industry average of 12.1 times P/E.

Both of the research houses have not assigned ratings on Carimin.

“We believe the 10% discount is justified, given its lower earnings base and the current muted outlook of the global oil and gas industry,” commented Kong.

However, a bank-backed oil and gas analyst told Theedge markets.com that works that Carimin is doing would be spared by the recent correction of Brent crude oil prices.

“The only risk for Carimin is whether Petronas would default the HUC contract but there is no such indication from the management [of Carimin],” he said.

“Anyway, their forward earnings are all fixed with the RM899 million contract granted by Petronas,” he said, adding that without the contract, its prospects would not be as great.   

 It is worth noting that Brent crude has declined to US$85 a barrel on Tuesday amid supply glut. It was trading at US$86.46 at the time of writing, according to data compiled by Bloomberg.

Carimin will be listed on the Main Market of Bursa Malaysia Securities on Nov 10, 2014. The IPO application will close today.

The company is issuing 60.7 million new shares at RM1.10 each to raise RM66.8 million. There is also an offer for sale of 5.9 million shares.

Carimin is licenced by Petronas to provide onshore and offshore hook up and commissioning (HUC) services. It also provides manpower supply and equipment rental services.