PERDANA (7108) : Perdana Petroleum - Making waves with a record quarter and a surprise dividend
Target RM2.63 (Stock Rating: ADD)
A bigger fleet and a high utilisation rate propelled Perdana to a record 3Q14. This led to a solid 9M14 net profit, also a record that, at 77% of our FY14 forecast, broadly met our expectation as we expect a slowdown in 4Q14 due to the monsoon season. But it was slightly below consensus, at 72% of its estimates. The first interim dividend in five years is a pleasant surprise. We continue to value the stock at a CY16 P/E of 14.8x, a 30% discount to the oil & gas big caps. Perdana’s record results and active fleet expansion are the potential re-rating catalysts that support our Add call.
74% yoy jump in 3Q net profit
Perdana's 3Q14 net profit soared 74% yoy to a new high as EBITDA margin expanded to a robust 50%, the highest in at least eight years and a far cry from 3Q13’s 30%. The improvement mainly came from 1) a bigger fleet of 17 working vessels in 3Q14 compared to 15 in 3Q13, and 2) a higher average utilisation rate of 93% in 3Q14 compared to 78% in 3Q13. 9M14 net profit surged 84% yoy. We had not expected a dividend, but Perdana surprised with an interim DPS of 2 sen, the first since FY09 after a boardroom tussle and a vessel glut that caused losses.
Expect a slowdown in 4Q
Perdana currently has a young fleet of 20 vessels, of which 17 are in operation (Figure 1). The fleet’s average age is 4.2 years old. Last month, Perdana took delivery of its 18th vessel, a 300-men workbarge named Emerald, which management expects to deploy in Feb 2015. After a record performance in 3Q14, we expect a soft 4Q14 given the ongoing monsoon season that slows down offshore activities. Nonetheless, it will not stop the company from ending the year with a record net profit.
Long-term jobs provide earnings stability
Currently, 83% of Perdana's vessels are on long-term charters. The company has an order book of around RM1.1bn up to FY19, providing stability to its earnings.
Source: CIMB Daybreak - 26 November 2014
Target RM2.63 (Stock Rating: ADD)
A bigger fleet and a high utilisation rate propelled Perdana to a record 3Q14. This led to a solid 9M14 net profit, also a record that, at 77% of our FY14 forecast, broadly met our expectation as we expect a slowdown in 4Q14 due to the monsoon season. But it was slightly below consensus, at 72% of its estimates. The first interim dividend in five years is a pleasant surprise. We continue to value the stock at a CY16 P/E of 14.8x, a 30% discount to the oil & gas big caps. Perdana’s record results and active fleet expansion are the potential re-rating catalysts that support our Add call.
74% yoy jump in 3Q net profit
Perdana's 3Q14 net profit soared 74% yoy to a new high as EBITDA margin expanded to a robust 50%, the highest in at least eight years and a far cry from 3Q13’s 30%. The improvement mainly came from 1) a bigger fleet of 17 working vessels in 3Q14 compared to 15 in 3Q13, and 2) a higher average utilisation rate of 93% in 3Q14 compared to 78% in 3Q13. 9M14 net profit surged 84% yoy. We had not expected a dividend, but Perdana surprised with an interim DPS of 2 sen, the first since FY09 after a boardroom tussle and a vessel glut that caused losses.
Expect a slowdown in 4Q
Perdana currently has a young fleet of 20 vessels, of which 17 are in operation (Figure 1). The fleet’s average age is 4.2 years old. Last month, Perdana took delivery of its 18th vessel, a 300-men workbarge named Emerald, which management expects to deploy in Feb 2015. After a record performance in 3Q14, we expect a soft 4Q14 given the ongoing monsoon season that slows down offshore activities. Nonetheless, it will not stop the company from ending the year with a record net profit.
Long-term jobs provide earnings stability
Currently, 83% of Perdana's vessels are on long-term charters. The company has an order book of around RM1.1bn up to FY19, providing stability to its earnings.
Source: CIMB Daybreak - 26 November 2014
