News  Yesterday, Perdana Petroleum (PERDANA) won a letter of award from Ocean Pro Offshore Sdn Bhd for the charter of one unit of accommodation barge.

 The firm duration of the contract is two years with an optional additional one year extension.

 The contract value for primary term of two years is approximately RM52.0m.

Comments  We are positive on this contract win as it illustrates the capability of PERDANA to secure contracts.

 We believe that PERDANA will utilise Petra Enterprise for this contract given that it is the only accommodation barge on spot.

 The daily charter rate (DCR) for the contract is RM71.2k per day which is within our RM67.5k and RM72k DCR assumption for the vessel in FY14.

Outlook  Medium-to-long-term prospects are stable on the back of PERDANA’s long-term contracts (15 OSVs).

 Currently, only two vessels (two 5k BHP AHTSs) are on spot charters and PERDANA is confident of securing recurring contracts for such vessels given the OSV up-cycle.

 Longer-term prospects will hinge on PERDANA’s future fleet expansion which we believe management will broach after it mobilises all vessels needed for the DAYANG project by next year.

Forecast  We have fine-tuned our charter rate assumptions for Petra Enterprise, but with only minimal changes (0.4% and -0.1% respectively) to FY14E and FY15 net profits.

Rating Maintain OUTPERFORM

Valuation  Our target price is RM2.47 based on an unchanged target PER of 15.5x (in line with

PERDANA’s +1.5 historical standard deviation forward level seen on top of its average mean in 2006-2008) on CY15 EPS of 15.3 sen.

Risks to Our Call (i) Lower-than-expected daily charter rates and utilisation rates and (ii) sudden downturn in crude oil prices that could adversely impact the offshore oil and gas services industry.

Source: Kenanga