Barakah is a direct proxy to PETRONAS’ Pan Malaysia Transportation & Installation (T&I) Package A play, according to Maybank. Maybank said it has a relatively new and modern Malaysia-flagged and-owned pipelay vessel to capitalise on T&I opportunities and the cabotage ruling advantage. Barakah is a growth stock, with a 3-year net profit CAGR of 28%. Maybank has assigned Barakah target price at RM1.00,their base-case target price is pegged to 12x FY15 PER, on a slight premium to small-mid cap O&G peers’valuations of 11x (with market capitalisations of sub-MYR3b). They initiating coverage with a BUY and MYR1.00 TP.
On a blue sky scenario, assuming that it wins Package A in a full contractor role, maybank FY15 net profit forecast would be higher at MYR100m (+45%) and Barakah target price would be MYR1.45 on an unchanged 12x PER target.
Barakah IPO listing price is RM0.65 (but the reference price is RM0.535 maybe got loan stock), according to Hong Leong, by applying a 14x multiple (which is their target multiple for small cap O&G companies) on FY14 EPS, their target price works out to RM0.80, implying a total upside potential of 23%.
Not many people have heard of Barakah IPO as I didn’t see them offer to the public via the normal IPO due to the reverse take-over. Not to worry on Vastalux, according to Barakah group president and CEO, Barakah are only assuming the stock number of Vastalux and will not be taking over any of its assets and liabilities.
