Petra Perdana 3QFY08 : On the road to recovery

December 10, 2008 at 6:38 am Leave a comment

• Slightly below estimates
Petra’s annualised 9M08 earnings came 9.9% below house estimates and a stark 17.6% below street estimates. The discrepancy largely stemmed from Petra Energy (Integrated Brownfield Services) as their major retrofitting contract with Shell had come to a close during the period. We
had initially banked on a smoother transition into the newly awarded RM1.1bn hook-up and commissioning contract but it appears not the case. The vessels segment performed within expectations for the period and for the 9M08 so far. During the quarter, the Group took delivery of 2 vessels, the Petra Adventurer and Traveller, both with >10,000bhp capacities and dynamic positioning enabled. To note we have excluded the RM34.1m gain on dilution of equity interest in Petra Energy recorded last year in our analysis.
• Accosted on many fronts this year, but coming through
Petra’s earnings have been plagued this year, largely by the delay in delivery of its new vessels. But rest assured, another 2 were delivered recently (Horizon and Voyager) that will be tied in for long term contracts with Petronas Carigali for a tidy rate of US$3.00 per bhp per day. The remainder of 7 AHTS and 8 support vessels (workboats and barges) are reportedly on schedule for now but for 2 as seen in figure 2. Otherwise, we believe we have managed to reflect most of the delays and potential new delays into our estimates hence the softer than consensus (21.3%
below) estimates for 2009. To note, we took some 5% off FY09 numbers to account for more slight delays in delivery schedule. As for the IBS segment, we had softened margin expectations earlier this year and rightfully so given the group has seen increases in operating costs.
Looking into 4Q, earnings may still come in slightly soft YoY hence we have taken our FY08 earnings down a notch (3.7%) to reflect this. However, things should normalise in FY09 with the new Shell contract.
• Upgrade to Buy. TP: RM2.00 unchanged.
Petra’s share price has been generally volatile of late post the major selling due to margin calls to some minority shareholders. We believe that some recovery can be seen but capped for now given current oil prices and within the company, potential for more vessel delays due to troubles
at shipyards. Our target price remains unchanged at RM2.00 given only very slight adjustment to bottom-line. Hence given the upside seen, we make a valuation call on the stock and upgrade to BUY.

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