Petra Perdana BUY
Price target RM5.50
Share price at 19 Mar RM3.34
Investment summary
Acquisition of two new work barges brings total work barges in the pipeline to eight units to be delivered over 2008-09. We estimate the new vessels to boost FY08-09 EPS by 2-8%. Share price trades at attractive valuation of 9x FY08PE and 40% discount to our sum-of-the-parts target price. High charter vessel charter rates environment is expected to prolong over the next two years, thus re-affirming our BUY call on Petra Perdana. We remain positive on O&G vessel owner/operators sector: (1) we believe charter rates are unlikely to see near term reversal and will continue to remain strong with new-builds lagging behind replacement market (2) the number of Malaysian flagged vessels is way below Petronas domestic demand.
40% discount to SOTP
Weak market sentiment continues to push the stock price down, declining by -40% YTD. The two new accommodation/work barges will boost EPS by 2-8%. Share price trades at 9x FY08PE and 35% discount to our SOTP.
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Tuesday 1 April 2008
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