Affin Research lowers Petra Energy to Reduce

KUALA LUMPUR: Affin Investment Research has downgraded Petra Energy to Reduce as its share price share had performed well after the 13th General Election and recommended investors to take profit.
"We
recommend investors to take profit for now as we believe the market has
largely priced-in the prospect of Petra Energy securing sizeable Pan
Malaysia hook-up and commissioning (HUC) works," it said on Monday.
Affin Research also raised the revalued net asset value-derived target price for Petra to RM1.83 from RM1.47.
However, it said the oil and gas based company's Q1, 2013 core net loss of RM11mil was below expectations.
"Petra
Energy reported a disappointing core net loss of RM10.8mil versus
RM2.8mil core net profit in 1Q12 due to lower profit contribution from
its integrated brownfield services business.
"The group's
integrated brownfield services division reported a weak 1Q13 revenue of
RM75.9mil and a loss of RM2.7mil due to lower vessels utilisation for
the Shell topside maintenance and HUC contracts as well as completion of
several projects under the Petronas Carigali HUC contract in the prior
quarters," it said.
Affin Research said Petra Energy recorded a
RM13mil profit from its onshore civil engineering division on
recognition of final settlement and contract closure for the Kumang
project, boosting its headline 1Q13 net profit to RM2.2mil.
"Overall, Petra Energy's 1Q13 core profit is grossly below market and our expectations."
It
said sequentially, Petra Energy's core net loss narrowed slightly from
RM13.5mil in 4Q12 to RM10.8mil. The group's weak 1Q13 result was mainly
due to lower work done for its key clients -- Shell and Petronas
Carigali -- while the losses in 4Q12 were partly attributable to
settlement of some legacy contract amounting to RM6.5m.
"The
RM3.6mil was in relation to a legacy vessel chartering contract and a
RM2.9mil final claim from Felda in relation to a fabrication &
installation work," it said.
The research house said Petra Energy
has submitted its bids for the RM5bil worth of Shell and Petronas' HUC
contracts under the Pan Malaysia tender.
"Petra Energy is the
current service provider for Shell's Sabah/ Sarawak and Petronas'
Sarawak HUC contract with work orders until June 2013," it said.
Given
the solid track record and working relationship with Shell and
Petronas, Affin Research said its expected Petra Energy to secure an
equitable share of RM2.5bil in the new tenders.
"We believe the Pan Malaysia HUC contracts are likely to be awarded in June/July 2013," it said.