CIMB Research Summary - 6 Nov 2014

IFCA MSC - Best quarter ever

3Q14 net profit was a record high for IFCA. At 178% annualized 9M14 net profit, IFCA’s 3Q results was above our (no consensus) expectations due to higher-than-expected top-line growth. We raise our FY14-16 EPS by 36%-100% to reflect stronger top-line growth and target price also rises based on unchanged 21x 2016 P/E(in line with domestic peers). The stock remains an Add with potential catalysts such as record 3Q14 net profit and move to Main Board in 2015.


Perisai Petroleum - In recovery mode

Perisai reduced its core net loss to RM3m as at end-Sep 2014 as the company returned to profitability in 3Q14, thanks to early profits from PP101 that started work in mid-Aug. We deem the performance broadly in line as we expect a stronger earnings recovery in 4Q14 given the first full-quarter of contribution from PP101, mitigating the loss of income from the unemployment of Rubicone and E3. We continue to value the stock based on CY16 P/E of 14.8x with an unchanged 30% discount to the P/E of the oil & gas big caps. We maintain our Add recommendation, with the full deployment of the assets as the potential re-rating catalyst.


Malaysia Marine & Heavy Eng - Running dry

MMHE's 9M14 net profit undershot expectations, forming only 70% of our and consensus full-year forecasts due to project delays. More worryingly, the company's dry spell, which resulted in the order book shrinking to a record low of RM1.7bn, ran counter to the positive outlook of its peers. Despite a rollover, our target price falls as we cut FY14-16 EPS for lower contract win assumptions. We now value the stock at 21.2x CY16 P/E (formerly 23.4x CY15 P/E) as we lower the target premium from 40% to 30% over our 16.3x target market P/E to reflect the current weak oil price sentiment. We maintain our Reduce call, with the potential de-rating catalysts of slower order book momentum and extended project delays. Switch to SapuraKencana.


Petronas Gas - More gas coming

We were pleasantly surprised that the Pengerang regasification terminal is expected to start soon, according to the conference call with PetGas yesterday. Once the terminal is completed in three years, PetGas's EBIT could be boosted by another 10-11%. We make no changes to our earnings forecasts and SOP-based target price of RM26.44. We remain optimistic on PetGas's earnings outlook, underpinned by its gas processing and transportation agreements which could see it continue to enjoy stable earnings and cashflow. We maintain our Add call on the stock. We expect the announcement of the Pengerang regasification terminal to act as a re-rating catalyst.