Perdana  Petroleum  announced  on  Bursa  Malaysia  yesterday  that  it  has  successfully divested  its  26.9%  stake  in  Petra  Energy  to  Wah  Seong  Corp  in  accordance  with  the terms and conditions of a share sale agreement.

Divestment  finally  complete.  With  the  completion  of  the  acquisition,  Perdana Petroleum is no longer a substantial shareholder of Petra Energy Bhd (BUY FV RM1.94) with  immediate  effect.  After  the  26.9%  stake  sale,  Petra  Energy  will  become  a competitor of  Perdana  Petroleum.  The  stake disposal  aside,  we  maintain  our  view  that Perdana Petroleum will still return to the black in FY12 in view of a better 2H12 for the oil and gas industry as a whole.

Trimming  FY12  and  FY13  earnings  estimate.  The  completion  of  the  divestment means  that  Perdana  Petroleum  will  no  longer  be  able  to  recognize  income  from  Petra Energy.  Hence  we  are  trimming  our  FY12  and  FY13  earnings  estimates  by  4.0%  and 9.8% respectively on account of the lower contribution from an associate company.

Acquires  two  new  vessels.  The  company  also  announced  yesterday  that  it  had entered  into  a  memorandum  of  agreement  with  Nam  Cheong  International  Ltd  on  30 Aug 2012 to acquire two 100-metre accommodation/work vessels (hull numbers SK308 and  SK309)  for  a  purchase  consideration  of  USD29.5m  each,  for  a  total  of  sum  of USD59m.  We  understand  that  the  vessels  are  expected  to  be  delivered  in  2Q13.  We believe that the acquisition is timely to cater for the expected increase in demand for the company's services  as  oil  &  gas  activities  pick  up  in  2H12. We  also  expect  more  new projects from Dayang when the latter secures more brownfield services tenders later this year.

Maintain  BUY.  We  are  maintaining  our  BUY  recommendation  on  Perdana  Petroleum, with a revised fair value of RM1.17 (previously RM1.30), 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