PERDANA (7108) - Perdana Petroleum - Record voyage
Target RM1.61 (Stock Rating: ADD)
Perdana charted record net profit in FY14, although it was 7% shy of our forecast and 6% below consensus estimates due to two unscheduled dry-docks in 4Q. Average vessel utilisation was a robust 91% and more than 70% of the vessels are on long-term charters. However, there could be contract renegotiation across the fleet in view of the lower oil price. Our target price drops as we reduce our FY15-16 EPS on lower average charter rate assumptions. We continue to value the stock at CY16 P/E of 10.5x, still at a 30% discount to the oil & gas big caps. The addition of higher-specification assets is the potential re-rating catalyst that supports our Add call. Perdana remains our top pick among the oil & gas small caps.
43% yoy jump in FY14 net profit
Perdana's 4Q net profit fell 31% yoy due to four dry-docks, of which two were scheduled (Expedition and Liberty) and two unscheduled (Voyager and Sovereign). Despite the soft 4Q performance, Perdana ended FY14 with record net profit, which jumped 43% yoy, propelled by the overall higher average vessel utilisation rate of 91%, up from an estimated 80% in FY13. The company’s full-year DPS of 2 sen matched our expectation.
Expanding its young fleet
Following the sale of Superior, Perdana now has a young fleet of 19 vessels, of which 17 are in operation (Figure 1). The fleet’s average age is 4.8 years. Its latest addition, a 300-man workbarge named Emerald, started work for UMW-OG last week. The construction of the company's 18th and 19th vessels, both 500-man workbarges, will be completed in 1Q16 and 2Q16, respectively. Currently, more than 70% of Perdana's vessels are on long-term charters (FY13: 65%). The company has an order book of around RM1.1bn up to FY19.
Renegotiation of contracts?
All 17 operating vessels are working in Malaysian waters, with seven deployed directly to Petronas. We understand that there could be renegotiation of the existing contracts with Petronas and its partners in view of the lower oil price, although no rate cuts have been implemented. To be prudent, we lower our average charter rate assumptions from around US$2.00/HP to US$1.60-1.80/HP, resulting in EPS reduction of 13-14% for FY15-16.
Source: CIMB Daybreak - 24 February 2015
Target RM1.61 (Stock Rating: ADD)
Perdana charted record net profit in FY14, although it was 7% shy of our forecast and 6% below consensus estimates due to two unscheduled dry-docks in 4Q. Average vessel utilisation was a robust 91% and more than 70% of the vessels are on long-term charters. However, there could be contract renegotiation across the fleet in view of the lower oil price. Our target price drops as we reduce our FY15-16 EPS on lower average charter rate assumptions. We continue to value the stock at CY16 P/E of 10.5x, still at a 30% discount to the oil & gas big caps. The addition of higher-specification assets is the potential re-rating catalyst that supports our Add call. Perdana remains our top pick among the oil & gas small caps.
43% yoy jump in FY14 net profit
Perdana's 4Q net profit fell 31% yoy due to four dry-docks, of which two were scheduled (Expedition and Liberty) and two unscheduled (Voyager and Sovereign). Despite the soft 4Q performance, Perdana ended FY14 with record net profit, which jumped 43% yoy, propelled by the overall higher average vessel utilisation rate of 91%, up from an estimated 80% in FY13. The company’s full-year DPS of 2 sen matched our expectation.
Expanding its young fleet
Following the sale of Superior, Perdana now has a young fleet of 19 vessels, of which 17 are in operation (Figure 1). The fleet’s average age is 4.8 years. Its latest addition, a 300-man workbarge named Emerald, started work for UMW-OG last week. The construction of the company's 18th and 19th vessels, both 500-man workbarges, will be completed in 1Q16 and 2Q16, respectively. Currently, more than 70% of Perdana's vessels are on long-term charters (FY13: 65%). The company has an order book of around RM1.1bn up to FY19.
Renegotiation of contracts?
All 17 operating vessels are working in Malaysian waters, with seven deployed directly to Petronas. We understand that there could be renegotiation of the existing contracts with Petronas and its partners in view of the lower oil price, although no rate cuts have been implemented. To be prudent, we lower our average charter rate assumptions from around US$2.00/HP to US$1.60-1.80/HP, resulting in EPS reduction of 13-14% for FY15-16.
Source: CIMB Daybreak - 24 February 2015
