KUALA LUMPUR (Nov 3): CIMB Research maintained its Add rating on SapuraKencana Petroleum Bhd at RM3.43 with a lower target price of RM6.84 (from RM7) and said it had learned from management that it was business as usual in post-election Brazil and rig utilisation has improved.
In a note Oct 31, the research house said Sapura Diamante had been dispatched to work for Petrobras in Brazilian waters.
CIMB Research said that meanwhile, the company had secured contracts for the four rigs that were unemployed in 2Q.
“We roll over valuations and our target price falls as we now value the stock at 21.2x CY16 P/E (formerly 23.4x CY15 P/E), a 30% premium over our target market P/E of 16.3x.
“We cut our premium from 40% to 30% to reflect the current weak oil price sentiment.
“We maintain our Add rating, with strong order book momentum and a successful E&P venture as potential re-rating catalysts. SapuraKencana remains our top pick among the O&G big caps,”it said.