Perdana Petroleum - Seeing double
Date:
2013-05-27
Firm:
CIMB
Stock:
Price Target:
2.40
Price Call:
BUY
Last Price:
0.435
Upside/Downside:
+1.965 (451.72%)
Target RM2.40 (Long Term: Out Perform)
Perdana is set to supply not two, but four yet-to-be-delivered workbarges for deployment by major shareholder Dayang for up to six years. The contract fits Perdana's focus on securing more longer-term charters to provide stability to its earnings.
Our target price rises as we raise our FY14-15 EPS to impute an additional two new workbarges, which will be delivered in 1H14. We apply a CY14 P/E of 15.6x, which is a 30% discount to the P/E of oil & gas big caps. Perdana remains an Outperform, with a stronger earnings upturn as a potential rerating catalyst.
What Happened
Perdana announced that it has been awarded a RM705m contract by Dayang Enterprise (DEHB MK, Not Rated) for the supply of five workbarges and a workboat for five years commencing in Jul 2013, with an extension option of another year. The vessels will be deployed to execute Dayang's RM2bn contract with Shell which calls for the provision of hook-up, commissioning and topside maintenance services.
What We Think
We are pleasantly surprised to learn from management that of the six vessels, four - all workbarges - will be newbuilds. We had earlier assumed that only two new workbarges, to be delivered this month and next month, would be used by Dayang for the Shell contract. The other two new workbarges are set to join Perdana's fleet in 1H14, taking the number of in-house vessels to 17.
Given the additional two new workbarges, we raise our EPS by 15.5% for FY14 and 14.8% for FY15 as we factor in RM5m annual net profit contribution from each workbarge based on these assumptions: 1) daily charter rate of US$24,000, 2) vessel utilisation of 80% and 3) net margin of 25%. Our FY13 EPS is maintained.
What You Should Do
We advise investors to accumulate the stock. Dayang has been buying actively, almost tripling its stake from 9.1% in Dec 2011 when it became a shareholder, to 26.1% currently.
What Happened
Perdana announced that it has been awarded a RM705m contract by Dayang Enterprise (DEHB MK, Not Rated) for the supply of five workbarges and a workboat for five years commencing in Jul 2013, with an extension option of another year. The vessels will be deployed to execute Dayang's RM2bn contract with Shell which calls for the provision of hook-up, commissioning and topside maintenance services.
What We Think
We are pleasantly surprised to learn from management that of the six vessels, four - all workbarges - will be newbuilds. We had earlier assumed that only two new workbarges, to be delivered this month and next month, would be used by Dayang for the Shell contract. The other two new workbarges are set to join Perdana's fleet in 1H14, taking the number of in-house vessels to 17.
Given the additional two new workbarges, we raise our EPS by 15.5% for FY14 and 14.8% for FY15 as we factor in RM5m annual net profit contribution from each workbarge based on these assumptions: 1) daily charter rate of US$24,000, 2) vessel utilisation of 80% and 3) net margin of 25%. Our FY13 EPS is maintained.
What You Should Do
We advise investors to accumulate the stock. Dayang has been buying actively, almost tripling its stake from 9.1% in Dec 2011 when it became a shareholder, to 26.1% currently.
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2013-05-27 22:33