Wednesday, 16 May 2012

PENERGY (FV RM1.50 - BUY) 1QFY12 Results Review: Gradually Seeing Some Performance


The 1QFY12 results were within our expectations. Although  the company’s 1QFY12 revenue was lower q-o-q, its  quarterly  net profit was quite consistent, contributed by margin improvement from the onshore civil engineering services segment as well as recovery of costs previously provided for the Kumang Project in  the  prior financial  years.  However, we are unsure of the quantum of cost recovered, and despite the 1QFY12 numbers making up 29% of our FY12 forecast, we are keeping our earnings unchanged for now. Petra Energy is still a Buy.

Within estimates. The 1QFY12 results were within consensus and our expectations, making up 27% and 29% of the FY12 forecasts. Petra Energy's 1QFY12 net profit of RM7.2m was sustainable, falling by only 11.5% q-o-q despite a 39.7% drop in revenue to RM131.3m. The weaker  revenue was due to the  slowdown in brownfield services, lower brownfield vessel utilisation and  slower orders for the design, fabrication, supply and installation services segment. Meanwhile, net profit was still good, contributed by margin improvement from the onshore civil engineering services segment as well as a recovery of costs previously provided for the Kumang Project in the prior financial years. However, we are unsure of the quantum recovered or whether it contributed significantly to the quarter’s sustainable performance. Finally, on a YTD comparison, the results were quite flat,  as revenue fell 0.8% while net profit rose 3.6%.

Still no news on sale of Perdana’s 26.9% stake. In April 2012,  the Edge  Weekly reported that the 2 parties interested in this stake are International Petroleum Investment Company (IPIC), a sovereign wealth investment company from Abu Dhabi, and  a Sarawak-based family, which also known to its major shareholder Shorefield Resources. Perdana has reportedly  appointed CIMB Investment Bank to undertake the restricted tender for the  divestment of Perdana’s entire 26.9% stake in Petra Energy. We believe this sale may  either  be in a lump sum or  on a  piecemeal basis, depending on the  offer price from the prospective buyer. We also believe that Perdana would prefer to dispose of this stake at a minimum of 1x book value, which is above RM1.50/share. Petra Energy’s net assets per share stood at RM1.62 as at 31 Mar 2012.

Maintain Buy. We are keeping our fair value for Petra Energy unchanged at RM1.50, based on the existing PER of 13x FY12 EPS, for now. In the event the disposal of Perdana’s 26.9% Petra Energy stake is on a lump sum basis and the company is let go to an established O&G outfit, this would represent an immediate re-rating for Petra Energy. However, if carried out on a piecemeal basis and to parties who are only pure investors, the sale would not bring any synergy to Petra Energy.

Source: OSK

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