Period     1Q13/3M13

Actual vs. Expectations   The 1Q13 net profit of RM11.1m came up to 19.4% of ours (RM57.2m) and 20.3% of the consensus FY13 full-year net profit (RM54.6m). 

While the result seemed low, we take it as largely within our expectations given that 1Q is a seasonally low quarter for offshore support companies due to the monsoon weather. 

We also highlight that Perdana is still also burdened by costs for the seven old vessels (that are currently inoperable) but they are expected to be sold off by June-13 and this will result in a more optimised cost structure moving ahead.

Dividends    No dividends were declared as expected.

Key Results Highlights    QoQ, the core net profit was down a marginal 5.6% due to a lower vessel utilisation rate in the current quarter (the utilisation rate fell to 74% from 85% in 4QFY12). This is, however, expected given that vessel players are typically hit in the 4Q and 1Q by the monsoon season.

YoY,  Perdana posted a complete turnaround in FY13 as its cost rationalisation exercise in 2012 (i.e. sale of some 12k bhp vessels and write-downs in the book value of its old assets (7 vessels)) has resulted in it benefitting from a lower cost structure in FY13. As such, its earnings were able to return to the black (versus the loss of RM8.1m in 1QFY12).

Outlook    A balanced offshore vessel mix will ensure that it has sufficient reach to the different segments of the O&G value chain.

Its relatively young asset fleet will also mitigate any contract replenishment risks.

Post the likely Dayang HUC contract win (expected soon), we believe that almost all of Perdana’s vessels will be on long-term contracts (at least a two-year visibility). This will also bump its 2HFY13 earnings and lead FY14’s EPS growth.

Changes To Forecasts     Given that its earnings are within expectations, we are maintaining our FY13-14 earnings estimates for now.

Rating  Maintain OUTPERFORM

Valuation     Our target price of RM2.18 is based on a targeted PER of 14.0x (in line with its 2-year historical average forward PER of 14.0x seen in 2007-2008) on its CY14 EPS of 15.5 sen.

Risks    1) Lower than expected capacity utilisation charter rates; and 2) the inability of Dayang (which has an agreement to hire Perdana’s vessels later) to secure a sizeable portion of the Pan Malaysia contract.

Source: Kenanga