RHB Research upgrades Perdana Petroleum to Outperform (7108)

KUALA LUMPUR: RHB Research Institute has upgraded Perdana Petroleum to an Outperform at the current price of 71.5 sen with a fair value of 82 sen.
The
research house said on Tuesday as offshore activities are expected to
pick up and subsequently charter rates, it believes Perdana's outlook
has turned a corner.
Perdana had inked an MoU with Nam Cheong to
buy two 100 metre accommodation/work vessels for US$59mil (US$29.5mil
per vessel) or RM183mil. The acquisition is expected to be completed by
2QFY13.
"The purchase signifies that Perdana's management is
confident of securing charters for its vessels. As we believe Perdana
is on track for profitability in FY13, we are changing our valuation
methodology to an average blend of P/BV and PER valuations," it said.
RHB Research said its new fair value of 82 sen was based on the average of 0.7 times FY13 P/BV and 12 times FY13 EPS.
"Our 12 times FY13 EPS target is in line with our target valuation for Dayang,
which is a 2.0 times discount to our sector average of 14 times CY13
EPS in light of Perdana's relatively small market capitalisation. We
upgrade our call on the stock to Outperform.
"We highlight that
Perdana's current valuation range of only 9-10 times FY13 EPS is a 30%
discount to the sector average, which implies that there is further
upside to the share price," it said.