Sky China Petroleum Services rated 'increase exposure' by SIAS Research

SIAS Research in a Nov 15 research report says: "We are initiating coverage on Sky China Petroleum Services (SKY), a China oilfield service provider that has acquired 49% stake in Wenling Xinghai Ocean Shipping Co Ltd early this year.
"The company’s balance sheet is robust, with a gross debt/equity of less than 5% and net cash position of $42.0 million. Including the recent private placement of $10.66 million, the net cash per share is 13.1 cents per share, accounting for approximately 64% of its current share price. SKY is attractively priced at 4.1X FY10F P/E (using weighted average of 349 million shares) and 0.6X FY10F P/B.
"We also expect the company to declare a dividend payout of 0.5 cents per share for FY2010, representing a dividend yield of 2.4%. Adopting an economic profit valuation and applying a WACC of 12.6% with 1.0% terminal growth rate, we arrive at an intrinsic value of 30 cents per share, representing an upside of 46.3%. INCREASE EXPOSURE (initiating coverage)."