News

Perdana proposed bonus issue up to 222.6m shares on the basis of two bonus shares for every five existing Perdana shares.

The proposed bonus issue is expected to be completed by 4Q13.

As at June 13, the issued and paid up share capital of RM250m comprising 498.8m shares. In addition, there are approximately 57.7m of warrant outstanding.

Comment

We are slightly positive on the proposed bonus issue as it will enhance the liquidity and marketability of the shares although there are not fundamental changes, theoretically.

Given the 2-for-5 bonus issue and assume ful exercise of the outstanding warrant prior to the entitlement date, total number of shares expect to enlarge to 779m shares.

Net asset per share expect to adjust from RM0.93 to RM0.67 based on the enlarged 779m shares.

Risks

Global recession hitting O&G price; Business and restructuring execution failure; and Increase in OSV supply

Forecasts

No impact to forecast.

Rating

BUY

Positives –

• Demand drivers improving.
• OSV supply relatively inelastic.
• Earnings inflection as restructuring nears completion.

Negatives –

• Increased competition for growth markets.
• Complexities of restructuring.

Valuation

Maintain BUY call with an unchanged TP of RM2.38 pegged at an unchanged 14x FY14 EPS of 17 sen/share based on our small cap O&G multiple.

Post the exercise, the ex-share price and ex-target price will be adjusted to RM1.24 and RM1.70 respectively.

Source: Hong Leong Investment Bank Research - 28 Aug 2013