PETRA Perdana Bhd’s 60%-owned subsidiary Petra Energy Bhd stands a good chance of winning the bid for Shell Sarawak/Sabah’s new topsides major maintenance (TMM) contract due to its experience and fleet, said RHB Research.
The company had a track record with Shell and Petronas Carigali, as well as a fleet of accommodation and work barges that would become available at the end of its newly secured Shell contract alongside the new vessels to be delivered to both Petra Energy and Petra Perdana.
The research house said Petra Energy was at the tail end of the current four-year contract estimated to be worth over RM1 billion that expires in early-2009.
Petra Energy recently announced that it had been awarded a RM40 million contract for the maintenance, overhaul and repair of gas turbines on Shell Sarawak’s gas platforms. The contract is for a period of two years commencing June 23, 2008.
“While this is positive for Petra Energy, we believe the company’s earnings outlook is still dependent on the award of the new TMM contract for Shell Sarawak/Sabah,” RHB Research said.
The research house reiterated its outperform recommendation on the counter at RM3.58 with an indicative fair value of RM5.31 based on 11.5 times FY09 price earnings ratio (PER).
“We believe the shortage of offshore support vessels will not be alleviated until FY10 at the earliest, which underpins the cyclical up trend in rates,” it said.
RHB Research said Petra Energy still had over RM300 million worth of jobs for operations and maintenance and equipment repackaging, over the next two years.
“The company also would be able to charter out its two work barges at a profit of around RM18 million each.
“Including cost savings from the 2,000 contract engineering staff, the company would still be able to record a minimum pre-tax profit of around RM60 million to RM70 million versus our current forecasts of RM78 million to RM83 million for FY08 to FY09,” it said.
“For Petra Perdana, we have assumed average charter rates to rise 10% per annum from US$2.44 (RM7.98) per horse power per day in FY08, and utilisation rates to rise from 78% in FY08 to 81% by FY10,” it said.
Petra Perdana added two sen to close at RM3.60 last Friday.
Source : The Edge
