Period

3Q15/9M15

Actual vs. Expectations

3Q15 results came in below both our and consensus expectations with cumulative core net loss of RM30.2m registered compared to RM3.1m loss and RM14.7m loss forecasted, respectively. Our core net loss excludes one-off unrealised forex losses of RM8.6m.

The variance to our forecast is largely due to lower-than-expected OSV vessel utilisation due to the idling of several vessels.

Dividends

No dividend was declared as expected. Key

Results

Highlights

In 3Q15, the group registered a loss of RM32.7m compared to net profit of RM28.2m in 3Q14 due to significantly lower vessel utilisation of 55% in 3Q15 vs. 98% in 3Q14 hampered by weaker O&G activities. This resulted in a 51.5% plunge in top line YoY while OPEX being at similar level for both quarters caused the group to run into losses.

On a QoQ basis, however, core net loss widened to RM32.7m from RM3.5m in the preceding quarter as the full impact of slowdown in work orders by oil majors was reflected in the quarter amid low oil prices. As a result, revenue dropped by 28.5% QoQ.

Cumulative 9M15 core net losses amounted to RM30.2m compared to RM72.9m core profit in the preceding year which was also due to lower revenue YoY by 33.4%, caused by lower overall vessel utilisation at 66%, which is significantly lower than the 94% utilisation registered in the same period last year.

Outlook

PERDANA has taken delivery of Emerald, a 300-pax accommodation barge in 4Q14. It has replaced enterprise, which is serving a multi-year contract running up to Feb 2016.

PERDANA is likely to be the least exposed OSV player to renegotiation of rates by Petronas as it is already providing relatively low rates compared to its peers (DCR of USD1.9/bhp vs. USD2.2-2.3/bhp by other OSV players) given that the contracts were won pre-rebound cycle (i.e. 2013).

However, its long-term charter contracts of the vessels to DAYANG is at risk as Shell looks to slow down work orders for their HUC contract this year in lieu of weak oil prices. This will in turn increase the possibility of premature charter contract termination for the group.

No further vessel additions are expected in FY15. The group will be saving resources for incoming deliveries of two higher-end 500- pax work barges scheduled to take place in 1Q16 and 2Q16, respectively, which is likely to be delayed by six months due to the tough market environment.

Funding for the 1st work barge, SK317, will be sourced from internal cash funding and debt.

Change to Forecasts

No changes to our earnings forecast.

Rating

CEASING COVERAGE

Valuation

We are ceasing coverage on PERDANA as its market float is now less than 5% post the MGO by DAYANG with the stock currently being suspended from trading. We do not foresee DAYANG to place out shares to the market in the medium-term to maintain listing status due to the current market condition. It will be consolidated into DAYANG’s earnings. Our previous TP is RM1.55 based on DAYANG MGO price.

Risks

Weaker-than-expected utilisation rates of vessels on spot charter.

Unexpected supply shocks in the oil market.

Source: Kenanga Research - 25 Nov 2015