Perdana to expand fleet

Business & Markets 2013
Written by theedgemalaysia.com
Monday, 06 May 2013 08:47
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Perdana Petroleum Bhd
(May 3, RM1.40)
Maintain outperform at RM1.40 with a revised target price of
RM1.80 (from RM1.50): Perdana is on course for further fleet
expansion given the impending delivery of two work barges. Chances
are high that the two new builds will be earmarked for deployment by
major shareholder DAYANG ENTERPRISE HOLDINGS BHD [], which is
eyeing a slice of Petroliam Nasional Bhd’s (Petronas) hook-up,
CONSTRUCTION [] and commissioning (HUCC) works worth RM10
billion.
Our target price rises as we raise our financial year ending December
2014 (FY14) and FY15 earnings per share (EPS) to reflect potential
contributions from the two work barges. We now value the stock at our
revised 2013 target market price-earnings ratio of 13.5 times, up from 13.3 times. Perdana remains an “outperform”, with a
stronger earnings upturn being the likely rerating catalyst.
Management confirmed at a meeting on May 2 that Perdana is set to add two new work barges in May and June this year,
expanding its young fleet to 15 marine assets.
We understand that the two work barges are likely to be chartered to Dayang, which is a strong contender for Petronas’
five-year HUCC contract packages. Worth RM10 billion in total, the packages are expected to be rolled out by mid-FY13.
Dayang is well-positioned to secure at least one package that will require it to supply various vessels including work barges
and anchor handling tug supply (AHTS) vessels. We raise our EPS by 17.9% for FY14 and 17.4% for FY15 as we expect
each work barge to chip in RM5 million net profit per year, based on these assumptions: (i) daily charter rate of US$24,000
(RM72,720); (ii) vessel utilisation of 80%; and (iii) net margin of 25%. Our FY13 EPS is maintained.
Perdana has been on a roll, landing RM500 million worth of contracts year-to-date, of which 86% came from a five-year
contract to supply four AHTS vessels to Petronas Carigali Bhd effective Jan 1 this year. The company will continue to focus
on securing more longer-term charters to provide stability to earnings.
On the back of improving prospects, we advise investors to accumulate the stock. Dayang has been buying actively, almost
tripling its stake from 9.1% in December 2011 when it became a shareholder to 26.1% currently. — CIMB Research, May 2