UOBKayhian on 1 Sep 2014
FY14F PE (x): n.a.
FY15F PE (x): 25.7
Our investment thesis is premised on four near/mid-term catalysts: a) immediate
upside to its share price once the government approves its transactions in Indonesia
(Block A Aceh PSC and Tanjung Aru PSC), b) significant upside to its 2P reserves
(75mmboe) by end-15, c) production to more than double from 7,800 barrels of oil per
day (bopd) in 2014 to 21,000bopd in 2016, and d) attractive M&A target at current
prices.
Target price of S$1.18 implies 47.5% upside. Our 1-year target price of S$1.18 implies
44.7% upside. Our target price is derived from our NPV valuation where we build
discrete DCF models for all of Kris’ assets (excluding exploration) and adopt three
valuation classes to better categorise the different asset risk profiles: a)
producing/near-producing assets, b) development/pre-development assets, and c)
exploration assets.
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