KENANGA RESEARCH Results Note

25 June 201 0

BUY
RM2.23
SapuraCrest Petroleum
Target Price: RM3.09 Starting off FY11 on the right note
Stock data
Market cap (RMm): 2,847.1 l 1QFY11 net profit of RM50.7m achieved 23% of our expectations
Issued shares (m): 1,276.7 (RM219.4m) and that of consensus (RM216.8m) underpinned by robust
52-week range: RM1.40-RM2.58 IPF and JV returns. Expected pick up in momentum going into 2QFY11
3-mth avg daily volume: 1,587,063 shrs given seasonality with Q1 and Q4 typically impacted by the monsoon
Bloomberg code: SCRES MK season.
YTD price chg: -10.1%
l QoQ, net profit rose 30.8% due to the increase in IPF division earnings
YTD KLCI chg: +4.2 %
(+99%) with the start-up of the PCSB Umbrella contract and reduction in
Est. free float: 27.2 % Marine Services division losses (-81.4%). JV earnings (RM11.3m) were
Major shareholders:
sequentially down (Q4FY10: RM27.5m) due to skewed 4QFY10 on write
Sapura Technology: 40.0%
Seadrill Ltd:: 23.6%
back of over-provisions for some previously completed projects and a slight
EPF: 9.2% delay in the start up of the SapuraAcergy for the year.

Consensus
FYE 31 Jan
Net profit (RMm):
EPS (sen):
Forecast revision
FYE 31 Jan
Prev. net profit (RMm):
Revision (%):
Revised net profit (RMm):
Share price chart
The Research Team
research@kenanga.com.my
Tel: 603-2713 2292
l YoY, net profit gained a whopping 97.5% again mainly on better margins
from the IPF (+8.8ppts) and drilling (+9.7 ppts) divisions. The PCSB
2010E 2011E
Umbrella project win and commendable JV contributions bumped up IPF
216.8 247.6
16.9 18.7
margins , while improved drilling margins were caused by higher drilling
charter rates garnered in FY10 for T9 and Teknik Berkat. Overall, net
margins expanded 4.0ppts (1QFY11: 7.6 %; 1QFY10: 3.6%).
2010E 2011E l Prospects intact for FY11. Management is positive as contracts are locked-
219.4 234.9 in for their main earnings drivers (IPF, drilling divisions and their JV-
- - SapuraAcergy); whilst optimisation of their fleet will continue as they mobilise
219.4 234.9
their new assets (the L&T and Quippo-Prakash pipe-lay barges) which they
have already received . Guided for profitable marine services division, within
the year, will lend strength to bottom -line numbers, while to date RM8.1b
order book (TLO: RM4.7b/ JV: RM1.9b (50% of RM3.7b)/ Drilling: RM0.7b/
Marine Services RM0.8b) will last them at least 2 years based on their burn
rate of RM3.5b per annum. Tender book is RM3b and increasing.
l Maintain BUY at RM3.09 TP on 18x FY11F. Our positive view on the stock
remains gi ven their locked-i n prospects. Earnings catalyst will come from the
Group’s push for an expanded regional base (India/Australia/Japan) and
sustained charter rates for their drilling contracts.

Results Highlights
FYE: 31 Jan (RMm) 1Q10 2Q10 3Q10 4Q10 1Q11 QoQ Chg YoY Chg
Revenue 716.2 1,031.6 1,024.8 484.7 670.4 38.3% -6.4%
Operating Profits 76.7 118.0 111.5 56.3 95.9 70.2% 25.0%
Pretax profit 68.1 107.9 115.5 72.9 98.7 35.4% 44.8%
Taxation (7.6) (14.3) (16.6) 7.3 (11.4) -256.2% 50.9%
Minority Interest (34.9) (41.0) (45.5) (41.4) (36.5) -11.9% 4.7%
Net profit 25.7 52.4 53.4 38.8 50.7 30.8% 97.5%
Basic EPS (sen) 2.0 4.1 4.2 3.1 4.0
DPS (sen) 0.0 3.0 0.0 4.0 0.0
Net debt/(cash) (x) 0.3 (0.1) 0.1 (0.2) (0.0)

ppts ppts
Operating margin (%) 10.7% 11.4% 10.9% 11.6% 14.3% 2.7 3.6
Pretax margin (%) 9.5% 10.5% 11.3% 15.0% 14.7% -0.3 5.2
Net margin (%) 3.6% 5.1% 5.2% 8.0% 7.6% -0.4 4.0
Effective tax rate (%) 11.1% 13.3% 14.4% -10.1% 11.6% 21.7 0.5

PP7004/02/2011(029201)
Results Review
FYE: 31 Jan (RMm) 1Q10 2Q10 3Q10 4Q10 1Q11 %QoQ %YoY Comment
Segment revenue:
Installation of Pipelines and 295.9 614.9 624.9 178.7 355.6 99.0% 20.2% QoQ, significantly up due to
Facilities the start- up of the PSCB
Drilling 242.2 218.2 196.8 187.1 194.8 4.1% -19.6% Umbrella contract that raised
Marine Services 167.2 181.6 193.7 103.6 111.9 7.9% -33.1% IPF earnings and offset the
significant drop from the
Operations and Maintenance 10.9 16.9 9.5 15.3 8.0 -47.4% -26.0% marine services division.
(O&M) YoY marginally down; mainly
due to weaker marine
Group Revenue 716.2 1,031.6 1,024.8 484.7 670.4 38.3% -6.4% services and operations and
maintenance returns.
Segment PBT:
Installation of Pipelines and
12.2 35.3 57.5 53.6 46.0 -14.1% 275.8%
Facilities
Drilling 71.3 87.7 94.5 83.5 76.3 -8.6% 6.9% QoQ, PBT up due to reduced
Marine Services 1.2 0.5 (20.8) (43.7) (8.1) +81.4% -806.4% losses from the marine
Operations and Maintenance 2.1 3.3 0.5 3.4 1.0 -71.8% -54.6% services division. YoY, PBT
up due to better margins from
Others (18.7) (18.9) (16.3) (23.9) (16.5) -31.1% -12.1% the IPF division.
Group Operating Profit 68.1 107.9 115.5 72.9 98.7 35.4% 44.8%

ppts ppts
IPF margin (%) 4.1% 5.7% 9.2% 30.0% 12.9% -17.0 8.8 QoQ, margins for IPF down
Drilling margin (%) 29.5% 40.2% 48.0% 44.6% 39.2% -5.5 9.7 due to Q4FY10 numbers
Marine margin (%) 0.7% 0.3% -10.7% -42.2% -7.3% 34.9 -8.0 being skewed by write-backs
of cost over provisioning of
previous projects. For the
drilling division, margins
O&M margin (%) 19.4% 19.2% 5.7% 22.2% 11.9% -10.3 -7.5 down due to one of the rigs –
T-3, being dry docked in the
quarter.

Earnings Estimates
FYE 31 Jan (RMm) 2008 2009 2010 2011F 2012F
Revenue 2,261.9 3,451.7 3,257.3 3,460.0 3,740.0
EBIT 264.5 384.4 362.5 456.0 498.9
Pretax profit 171.4 281.6 364.4 438.0 480.9
Net profit 78.3 115.8 170.2 219.4 234.9
Net profit growth (%) -542.4% 47.9% 47.0% 28.9% 7.0%
Basic EPS 6.6 9.7 13.3 17.2 18.4
EPS growth (%) -542.4% 47.9% 37.5% 28.9% 7.0%
DPS 1.9 4.7 7.0 7.0 7.0
Div Yield (%) 0.8% 2.1% 3.1% 3.1% 3.1%
PER (x) 34.0 23.0 16.7 13.0 12.1
NTA/share (RM) 0.8 1.0 1.0 1.1 1.2
Net (debt)/cash (x) (0.7) (0.4) 0.2 0.2 0.2
EV/EBITDA (x) 9.8 6.4 6.0 4.8 4.3
ROAE (%) 9.1% 9.7% 12.2% 14.4% 14.1%

SapuraCrest Petroleum – 25 June 2010 Page 2 of 3

 This page has been intentionally left blank

CMDF-Bursa Research Scheme (“CBRS”)

This report has been prepared by Kenanga Investment Bank Berhad (KIBB) for purposes of CBRS administered by Bursa Malaysia Berhad,
independent from any influence from CBRS or the subject company. KIBB will receive total compensation of RM15,000 each year for each
company covered by it under CBRS. For more information about CBRS, please visit Bursa Malaysia’s website at:
This document has been prepared for general circulation based on information obtained from sources believed to be reliable but we do not
make any representations as to its accuracy or completeness. Any recommendation contained in this document does not have regard to
the specific investment objectives, financial situation and the particular needs of any specific person who may read this document. This
document is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees.
Kenanga Investment Bank Berhad accepts no liability whatsoever for any direct or consequential loss arising from any use of this document
or any solicitations of an offer to buy or sell any securities. Kenanga Investment Bank Berhad and its associates, their directors, and/or
employees may have positions in, and may effect transactions in securities mentioned herein from time to time in the open market or
otherwise, and may receive brokerage fees or act as principal or agent in dealings with respect to these companies.

Published and printed by:

KENANGA INVESTMENT BANK BERHAD (15678-H)
8th Floor, Kenanga International, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia Yeonzon Yeow
Telephone: (603) 2166 6822 Facsimile: (603) 2166 6823 Website: www.kenangaresearch.com Head of Research

SapuraCrest Petroleum – 25 June 2010 Page 3 of 3