Journey to Wealth

Perdana Petroleum - A Done Deal

kiasutrader
Publish date: Thu, 28 Feb 2013, 09:53 AM
Perdana  Petroleum  (Perdana)  informed  Bursa  Malaysia  yesterday  that  its  wholly-owned subsidiary, Petra Offshore Limited (POL), had on 25 Feb 2013 entered into an agreement  to  dispose  of  seven  old  vessels  to  PT  Ninda  Vriesindo  for  a  total consideration of USD3.45m.  
 
Putting  the  worst  behind.  The  vessels,  expected  to  be  delivered  on  15  Mar  2013,  will potentially  give  rise  to  operating  cost  savings  of  about  RM10m-RM12m  per  annum.  As Perdana's management  has  made  a  provision  of  RM27.7m  in  FY12,  this  sale  should  not have  any  impact  on  the company's FY13  profit  and  loss  statement.  We  raise  our  FY14 earnings  estimates  for  the company as  we  believe  its management  is  likely  to  expand  its fleet this year given its cleaner balance sheet.  
 
Maintain BUY. We believe that the worst is over for Perdana and expect the flow of more positive  news  to be the stock's catalyst.  Meanwhile,  the  near  term  catalysts  are:  i)  the possibility  of  Dayang  securing  contracts  for  the  Pan-Malaysia  hook-up,  construction  and commissioning  jobs,  and ii)  the  possibility of the  company  being  acquired  as  the average age of its vessels has come down significantly as it has now disposed of the seven aged vessels,  whose  age  average  30  years.  We  are  nudging  up Perdana's FV  to  RM1.40, pegged to 13x on the stock's 12-month forward earnings, in line with our earnings upgrade for FY14.

Source: OSK
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