Petra Perdana : RM1.1bn Shell contract Outperform
Company Update
- Petra Perdana’s 60%-subsidiary Petra Energy announced that it had been awarded a RM1.1bn contract for the hook-up, commissioning and major maintenance services on Shell Sarawak/Sabah offshore platforms. The contract is for a period of four years commencing 23 September 2008. With this latest contract, Petra Energy’s orderbook now stands at RM1.4bn. As a result, our Petra Energy FY08-10 net profit forecasts are raised by 58%, 57% and 121% respectively.
- However, we are concerned about the liquidity crunch in US and Europe caused by bankrupties in the financial services sector that may derail Petra Perdana’s plan to finance its new vessels in FY08-10 via off-balance sheet schemes. While we concur with management that liquidity crunch is less of a concern the oil & gas sector, we believe cost of borrowing (i.e. lease rate) will likely to spiral up given increased yield spread globally. We have thus assumed that the financing cost will be 15% higher than previously arranged US$1/HP/day.
- We have raised our FY08 and FY10 EPS forecasts for Petra Perdana by 13.0% and 4.4% respectively but trimmed our FY09 EPS marginally after factoring in: 1) RM1.1bn contract secured by its 60%-subsidiary Petra Energy; and 2) higher effective interest rate for its new vessel financing. Accordingly, our fair value is trimmed slightly to RM4.64 (from RM4.79/share previously). Reiterate Outperform.-RHB
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