Perdana’s 1QFY12 results were within expectations. Although
it was still in the red for 1QFY12, we believe the company’s net losses are
narrowing and we expect Perdana to turn
around soon, with more jobs coming from Petronas and its PSC contractors as
well as Dayang – its strategic partner that will help it secure more new jobs.
Maintain Buy.
Within expectations.
In our view, although Perdana was still in the red for 1QFY12, we are seeing a
slight recovery in this quarter’s results, with its net loss narrowing to
RM8.2m from RM48.6m in 4QFY11. Of
course, the losses in 4QFY11 were inflated by the impairment of old
vessels amounting to RM39.3m and stripping out this write-down, the 4QFY11
loss from operations would be RM9.3m. Also, we can also draw comfort from the fact
that the utilization rate of its vessels had improved along with the increasing
O&G activities in Malaysia. However, vessel chartering in 1QFY12 failed to
reach its optimum level due to the monsoon season. On a YTD comparison, there
was minimal variance in its net profit as both quarters were also affected by
the monsoon season.
Brighter prospects
expected going forward. In our view, we believe the worst is over for
Perdana because: (i) it has already made the bulk of the provisions or
amortized most of its old vessels, (ii) management is now operating using a
leaner fleet of vessels with a balanced mix of brownfield and deepwater vessels
at a ratio of about 50:50, (iii) Perdana has Dayang as its strategic partner
and they can help one another – Dayang will help secure new vessel
contracts while Perdana would provide the required vessels, and (iv) there will be more jobs by Petronas and
its PSC contractors soon, especially on marginal oilfield and enhanced oil
recovery developments. The only
uncertainty remains is the timing of new contract awards by Petronas
and its PSC contractors as Perdana is really in need of new
awards considering that most of its
vessels are on short-term charter. Although
charter rates remain attractive,
the utilization rate continues to swing from two extreme ends due to the lack
of longer-term contracts.
Maintain Buy. Our fair value for Perdana remains unchanged
at RM0.90 based on the existing PER of
12x FY12 EPS. Given that its share price had retraced quite significantly following renewed concerns over the European
debt crisis, we advise investors to accumulate Perdana shares on
weakness as we expect the share price to rebound when the company shows more
concrete signs of a turnaround,
especially after securing new jobs.
Source: OSK
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