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Tuesday, March 1, 2011

OSK Research: Worst over for Petra Perdana, maintain Buy (Edge)

OSK Research said PETRA PERDANA BHD []’s FY10 results were below expectations due to low vessel utilisation and charter rates as well as an impairment loss of RM7.7 million.

“We believe 2010 is a ‘washout’ year for the company and expect it to gradually recover. Maintain Buy,” it said on Tuesday, March 1.

In reviewing Petra Perdana results, OSK Research said the FY10 net losses were higher than what consensus and it had expected.

Overall, the company was still in the red in 4QFY10 with a loss of RM18.3 million due to: i) a low vessel utilization rate; ii) low charter rates, and iii) an impairment loss of RM7.7 million.

OSK Research said on a quarter-on-quarter comparison, the 4QFY10 numbers improved, with net losses lower by 22.7% contributed by: i) higher utilisation rate of vessels, and ii) lower mobilisation costs during the quarter.

Finally, on a YTD comparison, the company recorded a net loss of RM71.5 million m for FY10 versus a net profit of RM29.3 million m the previous year due to: i) lower revenue; ii) lower vessel utilization rate; iii) lower charter rate; iv) an impairment loss of RM7.7 million and v) a gain on the divestment of PETRA ENERGY BHD [] shares of RM12.7 million in 2009.

“We believe 2010 was a ‘washout’ year for the company and expect it to recover gradually. Hence, our target price on the stock remains unchanged at RM1.57, based on the existing PER of 15x FY11 EPS.

“Going forward, we expect Petra Perdana to be the biggest beneficiary among its peers when Petronas and its PSC contractors dish out new vessel contracts as it has the lowest utilisation rate of about 50% compared to its peers’ 70%-80%,” it said.


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