KS Energy reported a 34.2% YoY rise in revenue to S$58.5m and a net loss of S$0.6m in 3Q14 vs. a net profit of S$0.2m in 3Q13. This brings 9M14 PATMI to S$46.4m vs. our full year estimate of S$51.5m, boosted by a rig sale in 2Q14. Core PATMI in 9M14 is estimated to be about S$3m vs. our full year figure of S$8m.

Profit after tax in 3Q14 was a respectable S$3.3m but PATMI slipped due to the reallocation of profits to shareholders from 80% of the profits of a subsidiary to 50%. This arose due to the payment of dividends by a subsidiary totaling S$8.6m. If not for the dividend payment, PATMI would have been S$1.9m.

Pending more details from management, we put our Buy rating and fair value estimate of S$0.58 under review.

Source: OCBC Research - 17 Nov 2014