PETRA - OSK Research maintains Buy on Petra Perdana, lower FV of RM1.50

Stock Name: PETRA
Company Name: PETRA PERDANA BHD
Research House: OSK

KUALA LUMPUR: OSK Research said PETRA PERDANA BHD []'s 1QFY11 results fell short of expectations.

It said on Wednesday, May 25 this was mainly due to the low utilisation rate of its vessels as a result of the monsoon season.

'We are downgrading our FY11-12 earnings by 43%-44%. However, we are of the view that the worst is over for the company. At the very least, Petra is showing some signs of recovery, as can be seen from its lower losses. Maintain Buy but with a lower fair value of RM1.50 (previously RM1.57),' it said.

PETRA - Petra Perdana active, up

Stock Name: PETRA
Company Name: PETRA PERDANA BHD
Research House: OSK

KUALA LUMPUR: PETRA PERDANA BHD [] shares rose on Thursday, May 12 after it secured RM73 million worth of new charter contracts for three mid-size anchor handling tug supply (AHTS) vessels.

At 10.35am, Petra Perdana rose 2.5 sen to RM1.02 with 2.69 million shares traded.

CIMB Equities Research has a Buy on Petra Perdana at 99.5 sen, at which it is trading at a price-to-book value of 0.9 times and FY12 price-to-earnings of 14.4 times.

It said on Thursday, May 12 Petra has been consolidating in a wedge pattern for the past few weeks. This consolidation phase appears to be at its tail end.

'As long as prices can hold steady above its recent swing low of RM0.925, we think stronger rebound is imminent,' it said.

CIMB Research said the technical landscape is improving. MACD histogram bars are falling at a slower pace while RSI has also turned upward. There is a minor hurdle at the 30-day SMA (now at RM1.02) while further upswing should push prices towards RM1.06 and RM1.15 next.

'Our strategy here is to buy on weakness. Prices must not fall below the 92.5 sen low to keep the bulls intact. Be quick to cut losses if prices violate the wedge support,' it said.

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PETRA - CIMB Research has Buy on Petra Perdana at 99.5 sen

Stock Name: PETRA
Company Name: PETRA PERDANA BHD
Research House: CIMB

KUALA LUMPUR: ''CIMB Equities Research has a Buy on Petra Perdana at 99.5 sen, at which it is trading at a price-to-book value of 0.9 times and FY12 price-to-earnings of 14.4 times.

It said on Thursday, May 12 Petra has been consolidating in a wedge pattern for the past few weeks. This consolidation phase appears to be at its tail end.

'As long as prices can hold steady above its recent swing low of RM0.925, we think stronger rebound is imminent,' it said.

CIMB Research said the technical landscape is improving. MACD histogram bars are falling at a slower pace while RSI has also turned upward. There is a minor hurdle at the 30-day SMA (now at RM1.02) while further upswing should push prices towards RM1.06 and RM1.15 next.

'Our strategy here is to buy on weakness. Prices must not fall below the 92.5 sen low to keep the bulls intact. Be quick to cut losses if prices violate the wedge support,' it said.

PETRA - OSK Research: Worst over for Petra Perdana, maintain Buy

Stock Name: PETRA
Company Name: PETRA PERDANA BHD
Research House: OSK

KUALA LUMPUR: 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.

PETRA - OSK still 'overweight' on O&G sector

Stock Name: PETRA
Company Name: PETRA PERDANA BHD
Research House: OSK

OSK Research has maintained its overweight position on the local oil and gas (O&G) sector as it believes the impact on the crude oil price will not be so severe due to tensions in Egypt.

Its top "buy" picks are Kencana with a target price of RM3.05, Petra Perdana RM1.57, Petra Energy RM2.16 and Alam Maritim RM 1.80.

In a research note today, OSK said, a minimal local O&G companies have exposure in the Middle East. "So far, we can think of only two that have exposure in the Middle East, but then again they are not in Egypt," it added.

The companies are KNM, which has manufacturing plants in Saudi Arabia and Dubai and Alam Maritim, that has chartered some vessels to Middle Eastern customers.

"We do not see the threat of unrest affecting its activities as they are in different geographical locations, one on land and the other in water," it explained.

It also remained unchanged on the oil price assumption for 2011 and 2012 at US$80-US$90 per barrel and US$90-US$100 per barrel respectively.

"However, we may increase our range in the event there is significant and prolonged unrest in the Middle East or if it spreads across a few countries with high petroleum reserves," the research house said.

Following a period of tension, Egyptian president Hosni Mubarak stepped down recently, which somewhat capped the surge in oil price. -- Bernama

PETRA - Up, up and away for O&G sector

Stock Name: PETRA
Company Name: PETRA PERDANA BHD
Research House: RHB

Oil and gas sector
Maintain 'overweight': We believe that the key themes of 2011 would be: 1) Increased news flows from the government in line with its Economic Transformation Programme aspirations; 2) An uptrend in crude oil prices with the second round of quantitative easing in G3 countries; 3) Increased mergers and acquisitions as companies gear up for the upcycle in the sector; and 4) Enhanced marginal oil field, deepwater and greenfield projects being awarded by Petroliam Nasional Bhd as long-term reserve replenishment objectives become even more imperative going forward.

This appears to be true thus far. As a result, most of the oil and gas (O&G) stocks under our coverage have been spiking up in the first week of January.

Despite the rally in share prices, we expect the trading sentiment of the sector to continue as we believe that investors are pegging the current O&G sector valuations to the upcycle seen in 2007/08, where Malaysian O&G stocks traded at the one-year forward price-earnings ratios of up to 30 to 35 times. As such we do not discount share prices trading higher as news of contract awards continue and there is still ample liquidity in the market.

While we are positive on what the sector holds for 2011, as share prices continue to increase on news flows, investors should be mindful that the uptrend could be derailed by: 1) execution risks; 2) timing risks; and 3) liquidity risks.

Nevertheless, we reckon the positive news will continue for now given the factors highlighted above. We have thus raised the fair values of Dialog Group Bhd, Kencana Petroleum Bhd and Petra Perdana Bhd. We have kept Dialog an 'outperform', and downgraded our call on Kencana to a 'market perform' as we believe much of the news about marginal-field development has been priced in at this juncture. For Petra Perdana, we have lifted the stock to a 'market perform' based on FY2011 net tangible asset per share.

We reiterate that we are positive on the overall sector going into 2011, as the contract pipeline looks very strong, while crude oil prices that are expected to stay above the US$85 (RM261) per barrel mark will provide optimism the sector needs. As such, we are reiterating our 'overweight' call on the sector. ' RHB Research Institute, Jan 11


This article appeared in The Edge Financial Daily, January 12, 2011.