Reflections on Volume

Big volume without further upside equals distribution
Big volume without further downside equals accumulation

Volume tends to peak at turning points
Volume often precedes price movement
Volume is a relative study

Friday, September 3, 2010

SapuraCrest: Buy, target price RM3.12

AMRESEARCH Sdn Bhd reiterated its "Buy" call on SapuraCrest Petroleum Bhd (8575)with an unchanged fair value of RM3.12 per share based on a 2010 forecast price earnings of 22 times.

The research house said the company remains the top pick in the oil and gas sector given its dominant position in Malaysia's pipe-laying/off shore installation services and tender rig market.

"SapuraCrest also has a huge order book of RM10 billion, the largest among locally listed stocks," it said.

However, including the full five-year Pan Malaysian pipe-laying contract, its gross order book is even larger at RM13 billion, with a sizeable oil and gas asset ownership.
At present, it has a substantial seadrill equity participation of 24 per cent and strong earnings forecasts from financial year 2009 to 2013 with a compound annual growth rate of 24 per cent.

"Hence, we maintain financial year 2011 forecast to financial year 2013 forecast earnings for now, which project annual earnings growth of up to 19 per cent, underpinned by the group's RM10 billion order book," it added.

AmResearch said the stock currently trades at an attractive 2010 forecast price earnings of 13 times, compared to over 25 times registered by SapuraCrest and Wah Seong back in 2007.


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