In line with Perdana Petroleum‟s next phase of growth to venture into
their 2nd new build programme of vessels, the Group has announced the
proposed acquisition of 2 units of 500-men Accommodation Work Barges
(AWB) for a consideration of USD84.0m, with an option for a further 2
units. The vessels will be acquired from Nam Cheong Limited whereby an
MoA has been signed. The delivery is expected in 1Q and 2Q of 2016. We
continue to recommend Perdana with an Outperform call, supported by its
execution abilities, proven by the recent secured extension charter
contract from Murphy Sabah/Sarawak Oil Co. Ltd., coupled with its
well-managed vessel utilisation (1Q: 83%) which has led them to deliver
improved 1Q results. To reiterate, Perdana has maintained its
Shariah-Compliant status at the recent Securities Commission Malaysia
review in May.
Higher specifications vessels in line with the Group‟s expansion plans to continue building up its marine support services to offshore O&G facilities. The higher specifications are in anticipation of potential requirements for the industry. All of Perdana‟s fleet are charted out currently, except for 2 units of 5000bhp AHTS, and 1 unit AWB SK312 (Perdana Emerald) which is scheduled to be delivered in October. Proving to have execution abilities, 15 out of 18 vessels of the Group have long term charter contracts, with an order book of c.RM1.4bn up to 2019.
The funding of USD84.0m for the 2 AWBs will be through internally generated funds and bank borrowings. The Group‟s current net gearing is at 0.6x, with the appetite to gear up to 1.5x. 20% of the total purchase consideration would be paid as deposit to Nam Cheong, and the balance of USD67.2m will be paid upon delivery.
Perdana’s strategies. To recap, i) pre-determined contract is tied to one of Perdana‟s undelivered vessels which would translate to materialised earnings as soon as the vessel begins its charter period, ii) its balance sheet has the ability to gear-up, currently operating at 0.6x net gearing (policy up to 1.5x), iii) favourable long-term rates owing to the limited supply of higher bhp vessels, and iv) Perdana‟s next phase of growth will be to venture into their 2nd new build programmes of vessels, to acquire more new assets in line with the Group‟s plan to have a balanced fleet of AHTS and work barges/workboats.
Outperform. Perdana‟s TP of RM2.32, is based on our DCF valuation using a 10.1% WACC to reflect a 20-year life expectancy of the vessels. We also see current weakness in price level as an opportunity to accumulate shares, trading at PE 14.4x (FY14F) and 12.7x (FY15F) forward-PE below its industry peers average of c.18x.
Source: PublicInvest Research - 24 Jun 2014
Higher specifications vessels in line with the Group‟s expansion plans to continue building up its marine support services to offshore O&G facilities. The higher specifications are in anticipation of potential requirements for the industry. All of Perdana‟s fleet are charted out currently, except for 2 units of 5000bhp AHTS, and 1 unit AWB SK312 (Perdana Emerald) which is scheduled to be delivered in October. Proving to have execution abilities, 15 out of 18 vessels of the Group have long term charter contracts, with an order book of c.RM1.4bn up to 2019.
The funding of USD84.0m for the 2 AWBs will be through internally generated funds and bank borrowings. The Group‟s current net gearing is at 0.6x, with the appetite to gear up to 1.5x. 20% of the total purchase consideration would be paid as deposit to Nam Cheong, and the balance of USD67.2m will be paid upon delivery.
Perdana’s strategies. To recap, i) pre-determined contract is tied to one of Perdana‟s undelivered vessels which would translate to materialised earnings as soon as the vessel begins its charter period, ii) its balance sheet has the ability to gear-up, currently operating at 0.6x net gearing (policy up to 1.5x), iii) favourable long-term rates owing to the limited supply of higher bhp vessels, and iv) Perdana‟s next phase of growth will be to venture into their 2nd new build programmes of vessels, to acquire more new assets in line with the Group‟s plan to have a balanced fleet of AHTS and work barges/workboats.
Outperform. Perdana‟s TP of RM2.32, is based on our DCF valuation using a 10.1% WACC to reflect a 20-year life expectancy of the vessels. We also see current weakness in price level as an opportunity to accumulate shares, trading at PE 14.4x (FY14F) and 12.7x (FY15F) forward-PE below its industry peers average of c.18x.
Source: PublicInvest Research - 24 Jun 2014
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