Barakah Offshore Petroleum Bhd
(April 6, 85.5 sen)
Maintain buy with target price of 96 sen: Barakah has announced that it had secured a contract from Kebabangan Petroleum Operating Company Sdn Bhd (KPOC) for the provision of topside maintenance services in Sabah. 

The total contract value will be dependent on the actual work orders by KPOC. But we understand that it should range between RM5 million and RM8 million. The contract period will be for one year with an additional year’s extension. Work is expected to commence on May 1 this year.

Barakah’s current outstanding order book remains at about RM2 billion. We can expect Pan Malaysia transport and installation (T&I) Package A to be the major revenue contributor for its financial year ending December (FY15), as well as the Pengerang pipeline. 

We understand that Barakah is still actively bidding for some RM900 million worth of contracts to replenish its order book.

We cut our FY15 earnings forecast to RM80.1 million (-17.6%) and FY16 to RM90.5 million (-10.8%) as we have accounted for a lower contract revenue contribution mostly from Pan Malaysia T&I Package A and the rest of the existing contracts, as well as lower order book replenishment.

Barakah’s short-term outlook seems muted at this point in time. Post earnings revision, we have a new target price of 96 sen based on an unchanged price-earnings ratio of 10 times on a revised FY15 earnings per share of 9.6 sen. Given that the stock still offers more than 10% upside, we maintain our “buy” call. — BIMB Securities Research, April 6

This article first appeared in The Edge Financial Daily, on April 7, 2015.