Falcon Energy Group -
Intrinsic Value S$0.575
Prev Closing Price S$0.410
Expect more from the Marine Division
Falcon Energy Group (Falcon) recorded an extraordinary 2Q results with revenue rising 9.3X QoQ to US$184m while PAT soared 36X QoQ to US$77m. These figures were mainly boosted by the disposal of two jack-up rigs which amount to US$128m revenue and US$71.5m gross profit.
The sale resulted in an attributable net PATMI of US$29m to the group. That said, the group generated about US$10m of operating PATMI in 2Q, substantially higher than our previous forecast of US$5m.
We currently forecast Falcon to report about US$7m operating PATMI quarterly and there maybe upside surprises to our forecast, in view of the positive marine and drilling division outlook. We have revised our FY14 and FY15 numbers upward slightly and resulted in a higher intrinsic value of S$0.575. Maintain Increase Exposure.
Operating revenue rose 212% YoY to US$55.7m mainly due to one-off contracts in the Oilfield Services Division and higher utilization rate in the Marine Division. Operating gross profit climbed 114% YoY to US$10.1m mainly backed by higher revenue in the two mentioned divisions. Operating expenses inched down slightly YoY due to effective cost control while the group recognized lower profit from associates, mainly due to CH Offshore. Consequently, PBT rose 35X to US$78.6m.
For the 1H of 2014, PPE rose by US$35m HoH to US$221m mainly due to the purchase of a new vessel and office premises while current deposits and receivables increased by US$53m HoH to US$105m as a result of installments paid for the rigs. The sale of the rigs probably led to higher current payables, which jumped US$42m to US$58m.
Net borrowings climbed by US$24m mainly for the purchase of PPE and expansion of business activities. Falcon also recommended an interim dividend of 0.5 S cent in view of the robust results.
Publish date: 05/11/13