PETR’s  1H13  net  profit  of  MYR24.3m  was  within  expectations, accounting  for  48%  and  45%  of  our  and  consensus  estimates respectively. We keep our NEUTRAL call on the stock and advocate that investors  buy  on  dips  as  the company’s prospects  are  still  promising  given  the  potential  surge  in  earnings  in  FY15.  In  line  with  the  slight earnings upgrade for FY14, we raise our FV to MYR1.80 from MYR1.75.

- In line. Petra Perdana (PETR)’s 1H13 net profit of MYR24.3m (+18.7% q-o-q,  >-100%  y-o-y)  was  within  our  and  consensus  expectations, accounting for 47.9% of our and 45.2% of consensus’ full year estimates. This  robust  showing  was  buoyed  by  a  higher  revenue  of  MYR128.4m (+26.5%  q-o-q,  +6.4%  y-o-y).  Meanwhile,  the  company’s  profit improvement  was  mainly  bolstered  by  higher  vessel  utilization  rates, lower  expenses  and  better  charter  rates,  although  the  numbers  could have  been  better  if  not  for  the  mobilization  and  dry-docking  costs incurred for some vessels.

- Raising  FY14  estimates.  In  late  July,  PETR  announced  that  it  will acquire an additional  work  barge  from  Nam  Cheong  for  a consideration of  USD29.5m.  We  are  of  the  view  that  the  vessel,  due  for  delivery  in 3QFY14, is likely to be chartered to Dayang Enterprise (DEHB MK, BUY, FV:  MYR6.50).  We  raise  our  FY14  earnings  forecast  by  5.8%  as  we include the potential earnings from the work barge into the fourth quarter of FY14.   

- Neutral  for  now.  We  advocate  buying  PETR’s shares on dips as the company’s prospects  are  compelling  moving  towards  FY15,  backed  by full  year  contributions  from  its  new-builds  and  its  strategic  partnership with  DEHB. Recall that most of PETR’s vessels are currently on long-term charters ranging from 3 to 5 years, which will  enhance its earnings visibility over the next few years.  

- Raising FV to MYR1.80. Following the FY14 earnings upgrade, we now value PETR at MYR1.80 vs MYR1.75 previously, with our FV pegged to 14x FY14 EPS.

Source: RHB