THE BUZZ
Perdana Petroleum (Perdana) announced to Bursa Malaysia yesterday that its subsidiary company, Perdana Nautika, has secured a letter of award from Petronas Carigali for the supply of four anchor handling tug supply vessels. Separately, Alam Maritim (Alam) announced that it has received a letter of intent from a Malaysia-based international oilfield services provider, for the provision of one straight supply vessel.
OUR TAKE
More to come. We remain positive on the prospects of the offshore supply vessel (OSV) market for 2013 in tandem with improving charter rates (USD1.8-USD2.2 per bhp) and more long-term OSV contract tenders, driven by heightening activities in the oil & gas sector. Catalysts will come from hook-up, construction and commissioning (HUCC) jobs due to be awarded from the Pan Malaysia cluster in Malaysian shores.
Alam Maritim still a BUY. RM1.25FV stays. The contract, for a period of nine months, is worth about RM8.1m, with an optional 12-month extension for a top-up value of RM10.9m. The award is in line with our view that Alam’s OSV business is on track for recovery. However, as we are still cautious on the company’s offshore installation and construction (OIC) business due to the dearth of contracts, we are not changing our earnings forecast. Our FV is maintained at RM1.25, pegged to 12x FY13 EPS.
More long-term contracts to come? Perdana’s contract, which is for a primary period of five years with the option to extend for another year, is valued at about RM430m. Based on the size and duration of the contracts announced, we estimate the daily charter rate at USD2.0 per bhp, in line with the current market rate. We view the latest contract for Perdana positively as it is consistent with management’s target for 60%-70% of contracts to be on long-term charter to provide earnings certainty. Should its major shareholder Dayang secure jobs in its Pan Malaysia bids, we see further upside to Perdana’s share price as it would be able to charter out more of vessels under long term contracts in the next five years.
Lifting FV to RM1.27 but still NEUTRAL on Perdana Petroleum. Although Perdana has bagged a new contract, we make no changes to our FY13 earnings estimate as we had previously incorporated some vessel orderbook replenishment. That said, we revise upward our FV to RM1.27 as we now value Perdana at 13x FY13 EPS (previously 12x), in line with our valuation for Alam. The upgrade is premised on recent long term contract wins with decent charter rates.
Perdana Petroleum (Perdana) announced to Bursa Malaysia yesterday that its subsidiary company, Perdana Nautika, has secured a letter of award from Petronas Carigali for the supply of four anchor handling tug supply vessels. Separately, Alam Maritim (Alam) announced that it has received a letter of intent from a Malaysia-based international oilfield services provider, for the provision of one straight supply vessel.
OUR TAKE
More to come. We remain positive on the prospects of the offshore supply vessel (OSV) market for 2013 in tandem with improving charter rates (USD1.8-USD2.2 per bhp) and more long-term OSV contract tenders, driven by heightening activities in the oil & gas sector. Catalysts will come from hook-up, construction and commissioning (HUCC) jobs due to be awarded from the Pan Malaysia cluster in Malaysian shores.
Alam Maritim still a BUY. RM1.25FV stays. The contract, for a period of nine months, is worth about RM8.1m, with an optional 12-month extension for a top-up value of RM10.9m. The award is in line with our view that Alam’s OSV business is on track for recovery. However, as we are still cautious on the company’s offshore installation and construction (OIC) business due to the dearth of contracts, we are not changing our earnings forecast. Our FV is maintained at RM1.25, pegged to 12x FY13 EPS.
More long-term contracts to come? Perdana’s contract, which is for a primary period of five years with the option to extend for another year, is valued at about RM430m. Based on the size and duration of the contracts announced, we estimate the daily charter rate at USD2.0 per bhp, in line with the current market rate. We view the latest contract for Perdana positively as it is consistent with management’s target for 60%-70% of contracts to be on long-term charter to provide earnings certainty. Should its major shareholder Dayang secure jobs in its Pan Malaysia bids, we see further upside to Perdana’s share price as it would be able to charter out more of vessels under long term contracts in the next five years.
Lifting FV to RM1.27 but still NEUTRAL on Perdana Petroleum. Although Perdana has bagged a new contract, we make no changes to our FY13 earnings estimate as we had previously incorporated some vessel orderbook replenishment. That said, we revise upward our FV to RM1.27 as we now value Perdana at 13x FY13 EPS (previously 12x), in line with our valuation for Alam. The upgrade is premised on recent long term contract wins with decent charter rates.
Maintain OVERWEIGHT on the O&G sector. Our FV for Alam implies a potential 61.3% upside from current level while our FV for Perdana implies an upside of 8.5% from the last closing price. Our top picks for the oil and gas sector are Dialog (BUY, FV: RM3.45) and Dayang (BUY, FV: RM2.90). We also like SapuraKencana as we expect more upside to our FV once the group completes the acquisition of Seadrill’s assets by the end of this month.
Source: OSK
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