Can PERDANA 7108 PERDANA PETROLEUM BERHAD steer to calmer waters?

 Can  PERDANA 7108 PERDANA PETROLEUM BERHAD steer to calmer waters?


Perdana Petroleum Bhd saw its share price being traded actively, rising 9.4% to close a 18 sen on July 3.


Is this time for investors to start accumulating the vessel operator?


As it is, the counter has done well, surging almost 60% over the past one year.


It reached a 52-week high of 22 sen early this year from a low of 8 sen in September last year.


The offshore marine services for the upstream oil and gas industry may appear to be heading some upward trajectory.


This is back by anticipated higher utilisation and charter rates for the offshore chartering segment of the oil and gas industry.


It is also a positive sign that the company is making some improvements in its latest results.


Perdana Petroleum managed to trim its net loss to RM8.26 million in 1QFY2023 from RM14 million a year ago.


This was mainly due to lower operating costs, lower depreciation charges as well as lower finance costs.


Revenue rose 2.84% to RM29.63 million from RM28.82 million, boosted by better daily charter rates (DCR) with an upsurge in demand for OSVs due to higher offshore upstream activities.


However, on a negative note, the company could not maintain its profitable streak having fallen back into the red after two consecutive profitable quarters.


It blamed the monsoon season during the first quarter of this year, leading to a much lower vessel utilisation rate, which was at 31% as compared to the 60% utilisation rate in the 4th quarter of 2022.


Fortunately, better DCR due an upsurge in demand for OSVs helped to negate the impact of the lower utilisation rate to some extent.


However, while there is some recovery in the OSV market, uncertainties due to the current geopolitical dynamics, rising inflation and interest rates could drag the players further.


As it is, ​​OSV players have been bracing for higher operating costs due to higher bunker prices and growing inflationary pressure that has adversely impacted bottom lines.


Higher energy prices have pushed up the cost to maintain and operate vessels.


These vessel operators are also impacted by higher machinery and equipment costs due to a weaker ringgit against the US dollar and other currencies, as well as higher logistics expenses.


Overall, how well Perdana Petroleum can reverse its fortunes hinges on the extent of the charter rates.


Hopefully, the charter rates are high enough to offset the rising costs and help Perdana Petroleum record a full profitable year.
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