KUALA LUMPUR: Maybank KE Research has initiated coverage on UMW-OG with a Buy rating and target price of RM4.80, having considered the group’s more superior growth and prospects.
In a note on Monday, Maybank KE said UMW-OG OG is the only domestic owner-operator of drilling rigs witha track record to boot.
“It offers a primary play on Malaysia and SEA’s jack-up (JU) drilling activities, capitalising on Malaysia’s import substitution opportunities, rising demand for new premium JUs and strong replacement cycle prospects,” its said.
Maybank KE said it expects a two-year net profit CAGR of 78% (2013-2015) on improving Ebitda margins, underpinned by the new JU charters coming on stream, and higher day rates and utilisation levels for existing units.
“More importantly, UMW-OG has the balance sheet strength to expand its JU fleet size beyond the projected five units.
“UMW-OG, in our view, can still pursue two new JUs in 2015 and grow net earnings by 29% (based on full-year contribution) while still comfortably retaining its financial discipline, with a projected net gearing of 64%,” it said.