Tanjung Offshore (RM1.29; Fully Valued; Price Target: RM1.35; TOFF MK)
Awarded RM15m maintenance service contract
Tanjung Offshore announced that it has been awarded a RM15m contract for the provision of valve repair and maintenance services for Murphy Sarawak Oil. The contract, effective from Mar 11 to Mar 14, comes with a 2-year renewal option where the contract amount will only be
determined by then.
We think that the contract is unlikely to contribute much to our earnings forecast given that its revenue contribution makes up less than 1% of our FY11F revenue. We project maintenance services segment to only contribute 5% of our FY11F EBIT. Offshore support vessel services is still Tanjung Offshore’s main earnings driver and we think that charter replenishment is still a concern at this juncture.
We reiterate our Fully Valued call. We review our RM1.35 TP, pegged to 12x FY11F earnings, for possible reduction.
From HWangDBS
Tanjung Offshore announced that it has been awarded a RM15m contract for the provision of valve repair and maintenance services for Murphy Sarawak Oil. The contract, effective from Mar 11 to Mar 14, comes with a 2-year renewal option where the contract amount will only be
determined by then.
We think that the contract is unlikely to contribute much to our earnings forecast given that its revenue contribution makes up less than 1% of our FY11F revenue. We project maintenance services segment to only contribute 5% of our FY11F EBIT. Offshore support vessel services is still Tanjung Offshore’s main earnings driver and we think that charter replenishment is still a concern at this juncture.
We reiterate our Fully Valued call. We review our RM1.35 TP, pegged to 12x FY11F earnings, for possible reduction.
From HWangDBS
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