CIMB: Petra Perdana results likely to disappoint

KUALA LUMPUR: Oil and gas stalwart PETRA PERDANA BHD [] may disappoint shareholders and investors with weak third-quarter (3Q) financial results, which are slated to be announced on Nov 18, CIMB Investment Bank said in a report yesterday.

The report said Petra Perdana’s utilisation of vessels has plunged to 49% in 3Q09 from 2Q’s 65% and an average of 85% in FY08. CIMB added that the late delivery of new vessels, the preference for long-term charters as opposed to more lucrative spot charters and the slowdown of activities at 60%-owned PETRA ENERGY BHD [], would also add to the earnings shortfall.

“We caution investors of a potential 27%-34% earnings cut and a review of our target price and recommendation. The 3Q09 earnings setback is a likely derating catalyst, along with a prolonged period of depressed utilisation rates,” CIMB said, adding that investors should switch to KENCANA PETROLEUM BHD [] or SAPURACREST PETROLEUM BHD [].

Petra Perdana has an existing fleet of 24 vessels and is awaiting the delivery of nine more ships between now and end-2010. The deliveries have not been on schedule, which has resulted in some difficulty for the group.

According to CIMB, to date only six vessels — Petra Voyager, Petra Endeavour, Petra Ranger, Petra Orbit, Petra Liberty and Petra Galaxy — have been added to the fleet, whereas an earlier schedule had indicated the delivery of seven vessels in 1H09 alone.

These late deliveries have hampered Petra Energy, causing it to fall behind schedule for the RM1.1 billion Shell maintenance contract it secured about two months ago.

“The anticipated 3Q09 results letdown would make it the sixth consecutive quarter of earnings miss relative to both our expectations and consensus,” said CIMB.

“While we understand that the utilisation rate for 4Q09 so far has edged above the 50% mark, our forecasts are too bullish and overestimate the pace of the group’s fleet expansion,” it added.

Pending the announcement of the 3Q results, CIMB kept its neutral call and maintained its forecasts and sum-of-parts based target price of RM2.52.

Petra Perdana fell 12 sen to close at RM2.40 yesterday.


This article appeared in The Edge Financial Daily, November 11, 2009.