Perdana Petroleum’s 9MFY12 results came in below our initial forecasts but within consensus’, accounting for 32.5% of our and 61.7% of consensus full-year estimates. Its earnings turned positive compared to a net loss last year and thisreinforces our view that things are getting better for the company. We are trimming our FY12 earnings forecast by 27.7%, as 4QFY12 earnings are unlikely to be stronger than this quarter due to the monsoon season, but make no changes toour FY13 earnings forecast in view of better prospects next year. Maintain BUY with an unchanged fair value (FV) of RM1.17.
Below expectations but recovery in sight. Perdana Petroleum’s 9MFY12 results came in below our initial forecasts but within consensus’, accounting for 32.5% of our initial estimates and 61.7% of consensus estimates. Revenue grew 10.9% q-o-q due to increase in vessel utilization, which improved from 75% in the previous quarter to 92% in the current quarter, coupled with better charter rates. Its 9MFY12 earnings turned positive to RM12.1m compared to a net loss of RM17.4m during the same period last year. We believe that 4QFY12 results may not be as strong as this quarter due to the monsoon season. As such, we are trimming our FY12 earnings estimate by 27.7% but make no changes to our FY13 earnings forecast in view of better prospects for the company next year.
Disposal of old vessel remains challenging. In a recent meeting with management, we understand that disposal of its old vessels (seven vessels worth RM38m-RM40m in total) remains challenging. We understand that the difficulty lies in getting a decent valuation for its assets due to the financing issues at the buyers’ end – buyers who are willing to pay cash would prefer to pay less while buyers who are willing to pay more find it difficult to secure financing due to their poorer financial background. Nonetheless, we understand that this issue will not haunt the company’s income statement as it has already made the bulk of the provisions or armotized most of these vessels.
The going to get better. We maintain our view that the worst is over for the company and expect prospects to be better next year due to i) the recovery of charter rates, ii) Dayang’s strategic entry into the company, which could benefit Perdana when the latter secures more new jobs later on, especially jobs in the Pan Malaysia cluster, and iii) the delivery of two more work barges, which would enhance its revenue.
Maintain BUY. We are maintaining our BUY recommendation on Perdana Petroleum, with an unchanged FV of RM1.17, based on the existing PE of 12x FY13 EPS. Note that our fair value is derived from the company’s enlarged share capital of 556.4m shares, assuming full conversion of its existing warrants.
Below expectations but recovery in sight. Perdana Petroleum’s 9MFY12 results came in below our initial forecasts but within consensus’, accounting for 32.5% of our initial estimates and 61.7% of consensus estimates. Revenue grew 10.9% q-o-q due to increase in vessel utilization, which improved from 75% in the previous quarter to 92% in the current quarter, coupled with better charter rates. Its 9MFY12 earnings turned positive to RM12.1m compared to a net loss of RM17.4m during the same period last year. We believe that 4QFY12 results may not be as strong as this quarter due to the monsoon season. As such, we are trimming our FY12 earnings estimate by 27.7% but make no changes to our FY13 earnings forecast in view of better prospects for the company next year.
Disposal of old vessel remains challenging. In a recent meeting with management, we understand that disposal of its old vessels (seven vessels worth RM38m-RM40m in total) remains challenging. We understand that the difficulty lies in getting a decent valuation for its assets due to the financing issues at the buyers’ end – buyers who are willing to pay cash would prefer to pay less while buyers who are willing to pay more find it difficult to secure financing due to their poorer financial background. Nonetheless, we understand that this issue will not haunt the company’s income statement as it has already made the bulk of the provisions or armotized most of these vessels.
The going to get better. We maintain our view that the worst is over for the company and expect prospects to be better next year due to i) the recovery of charter rates, ii) Dayang’s strategic entry into the company, which could benefit Perdana when the latter secures more new jobs later on, especially jobs in the Pan Malaysia cluster, and iii) the delivery of two more work barges, which would enhance its revenue.
Maintain BUY. We are maintaining our BUY recommendation on Perdana Petroleum, with an unchanged FV of RM1.17, based on the existing PE of 12x FY13 EPS. Note that our fair value is derived from the company’s enlarged share capital of 556.4m shares, assuming full conversion of its existing warrants.
Source: OSK
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