AmResearch has maintained its Buy call on KENCANA PETROLEUM BHD [] with an unchanged fair value of RM2 a share, pegged to a CY10 PE of 20 times.
It said on Tuesday, Oct 5 that it remains positive on Kencana, which is poised to ride on an up cycle in new domestic oil & gas contract rollouts coupled with the listing of MISC's Malaysia Marine & Heavy Engineering and Petronas Chemical Group by year-end.
Kencana currently trades at an attractive CY11F PE of 14 times, way below its 2007 peak of 25 times
Kencana had secured two contracts worth RM31 million, which will be completed in 1QCY11. As Kencana's only fabrication facility currently is a 135-acre yard in Lumut.
“We understand that the group may still be eyeing Labuan Shipyard's ship-repair facilities for offshore vessels and to bid for hook-up and commissioning services for Petronas' oil rigs in peninsula Malaysia as well as Sabah and Sarawak,” it said.
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