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, January 28, 2011

SapuraCrest Petroleum: Buy, target price RM4.40

AMRESEARCH kept its "buy" call on SapuraCrest Petroleum Bhd (8575)after the firm won a fresh US$32 million (RM97.92 million) contract from Petroliam Nasional Bhd (Petronas) in Myanmar.

The stock is its top pick for the oil and gas sector for its attractive valuations, strong order book, re-acceleration of order book accretion and improving earnings delivery.

AmResearch estimated that SapuraCrest's latest contract will boost its earnings in the 2012 fiscal year by 2 per cent.

While this project will only add a slight 1 per cent to the group's outstanding gross order book of RM9 billion, AmResearch believes that this is just a foretaste of the pipeline of massive new orders given SapuraCrest's established capability in securing new jobs domestically and overseas.

"We maintain our view that SapuraCrest is a favourite to secure offshore installation jobs from Petronas' prolific capital expenditure rollout, potentially up to RM40 billion this year," it said in a report yesterday.

The stock closed at RM3.58 yesterday, which implies a potential upside of 23 per cent to AmResearch's target price.

Read more: SapuraCrest Petroleum: Buy, target price RM4.40

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