RHB raises Perdana Petroleum earnings forecast, TP

RHB raises Perdana Petroleum earnings forecast, TP
Business & Markets 2013
Written by Shalini Kumar of theedgemalaysia.com
Wednesday, 21 August 2013 12:33

KUALA LUMPUR (August 21): RHB Research has raised its earnings forecast for Perdana Petroleum Bhd, and target price (TP) for shares of the oil and gas support-services provider.

In a note today, RHB said it has revised upward its earnings forecast by 5.8% for Perdana Petroleum in financial year ending December 31, 2014 (FY14). Following the earnings revision, RHB has raised its TP for the stock to RM1.80 from RM1.75 previously.

RHB said Perdana Petroleum's prospects are "still promising" given the potential surge in earnings in FY15. This is due to the acquisition of an additional work barge from Nam Cheong for a consideration of US$29.5 million (RM97 million).

"We are of the view that the vessel, due for delivery in 3QFY14, is likely to be chartered to Dayang Enterprise. 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," said RHB which maintained its "neutral" call for Perdana Petroleum.

RHB advocates buying of the company's shares on dips as its prospects are compelling moving towards FY15. This is backed by full-year contribution from its newly-built marine vessels and strategic partnership with Dayang Enterprise.

"Recall that most of the vessels are currently on long-term charters ranging from three to five years, which will enhance its earnings visibility over the next few years," RHB said.

RHB's note follows the announcement of Perdana Petroleum's latest financials yesterday.

According to RHB, Perdana Petroleum's 1HFY13 net profit of RM24.3 million came in within expectations, accounting for 48% and 45% of the research firm's and consensus estimates respectively.