Petra Energy shares up on Perdana Petroleum soliciting bids for stake

KUALA LUMPUR (April 27): PETRA ENERGY BHD [] shares advanced on Friday after Perdana Petroleum Bhd, formerly known as PETRA PERDANA BHD [] said it was soliciting bids for its entire 26.9% stake in Petra Energy.

At 9.38am, Petra Energy rose four sen to RM1.18 with 155,100 shares done.

In a statement to the exchange on Thursday, Perdana Petroluem said it had appointed CIMB Investment Bank Bhd to undertake a restricted tender for its 57.7 million Petra Energy shares.



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Perdana Petroleum solicits bids for Petra Energy stake

KUALA LUMPUR (April 26): Perdana Petroleum Bhd, formerly known as PETRA PERDANA BHD [], is soliciting bids for its entire 26.9% stake in PETRA ENERGY BHD [].

In a statement to the exchange on Thursday, the oil-and-gas support services firm said it has appointed CIMB Investment Bank Bhd to undertake a restricted tender for its 57.7 million Petra Energy shares.

"Perdana Petroleum will make the necessary announcements in accordance with the main market listing requirements of Bursa Malaysia Securities Bhd, once the terms for the divestment of the said Petra Energy shares has been agreed and a definitive agreement has been executed," it said.



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CIMB Research has technical buy on Perdana Petroleum at 77.5 sen

KUALA LUMPUR (Feb 10): CIMB Equities Research has a technical buy on Perdana Petroleum at 77.5 sen at which it is trading at a FY13 price-to-earnings of 9.7 times and price-to-book value of 0.7 times.

It said on Friday Perdana Petroleum broke out of its triangle pattern yesterday and is now charging towards the 200-day SMA.

“A push above this moving average would be medium term positive as it also signals the return of the bulls.

“Technical landscape is improving. MACD signal line has staged a positive crossover while RSI is also rising. Once the 78.5 sen level is taken out, we expect the stock to edge closer towards 85.5 sen and 90 sen,” it said.

CIMB Research said aggressive traders may start to nibble now while others should wait for a push above 78.5 sen before going long. However, always place a stop at between 75 sen to 71.5 sen to limit downside risk.



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Perdana Petroleum: A cleaner house

Perdana Petroleum Bhd (Dec 20, 69.5 sen)
Maintain hold with target price of 70 sen: Cash flows have eased following the refinancing of its RM130 million debt, originally due in 2012/13. While this is a positive, the operating outlook remains a challenge. Old vessels continue to drag on earnings, while the direction over its 27% stake in Petra Energy Sdn Bhd remains unclear. Perdana remains a “hold” with an unchanged target price of 70 sen (0.7 times price-to-book value).

Perdana recently secured new borrowings totalling RM160 million from offshore banks (5% interest per year), stretching its debt repayment over the next seven years (till 2018). The proceeds, largely used to settle its outstanding debts (ex-bond) of RM130 million (6.6% per year interest) due in 2013 has immediately lightened the drain on its cash flow. However, Perdana will incur a one-off charge from the refinancing exercise, likely to be recognised in 4QFY11 or 1QFY12.

Without the refinancing, Perdana would have been burdened with hefty debt settlements in 1QFY12 (RM45 million) and 1QFY13 (RM75 million). Cash flow would be strained and could force Perdana to undertake a cash call or fire sale exercise. Separately, it has another RM105 million serial bonds outstanding. We reckon that Perdana is unlikely to seek refinancing. It will pay off the loans in three equal tranches (March 2012, September 2012, March 2013).


Perdana’s eight ageing vessels (27 to 37 years old) are currently laid up. They generate zero income and incur depreciation and maintenance costs of RM8 million to RM10 million per year. Perdana has been actively looking for buyers but has been unsuccessful to date due to weak market conditions. Conservatively, we estimate these vessels to be worth RM20 million at scrap value; it could potentially write off RM60 million from its balance sheet.

Its 26.9% stake in Petra Energy remains a concern. It has one board seat (non-independent, non-executive) in Petra but has limited control over the operations. Petra’s results have disappointed of late, plagued by cost overruns. We rule out the sale of its stake at this juncture unless there is a need to raise cash immediately. At yesterday’s closing price of RM1.07, Perdana’s stake is worth RM61.7 million, a fraction of Petra’s historical high of RM5.60 (July 2007). — Maybank IB Research, Dec 20


This article appeared in The Edge Financial Daily, December 21, 2011.



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HDBSVR: KLCI may slip below 1,445

KUALA LUMPUR (Nov 25): Hwang DBS Vickers Research said Asian equities would probably swing sideways on Friday pending the emergence of fresh market leads.

Over in the Europe, most stock exchanges ended between flat and marginally weaker on Thursday while Wall Street was closed for Thanksgiving.

“Back home, after staging a technical rebound yesterday, the benchmark FBM KLCI might slip below its immediate support level of 1,445 ahead,” it said.

HDBSVR said against the weak market backdrop, stocks that could be in the limelight today include: (a) MISC, which could benefit from its exit from the loss-making liner business; and (b) Perdana Petroleum, DRB-Hicom and Coastal Contracts following the release of their latest quarterly results that fell short of expectations.



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Another Sarawak investor for Perdana Petroleum

PERDANA Petroleum Bhd has got another Sarawakian investor in Dayang Enterprise Holdings Bhd, barely a week after Sarawakian Tiong Chiong Hiiung bought 8.15 per cent stake in the oil and gas services provider.

In a statement yesterday, Dayang said it is buying a 10 per cent stake in Perdana Petroleum as part of its plan to expand and diversify its business to mitigate the shortfall of vessels.


"In addition, the board believes that the proposed subscription would provide the opportunity to participate in potentially high yielding contracts," the company told Bursa Malaysia.

Last week, Tiong, a Sarawakian chicken breeder emerged as a substantial shareholder in Perdana Petroleum via Achiever Development Sdn Bhd.

Achiever is believed to be a vehicle of the Tiong family in Sarawak, of which Tiong has a direct shareholding.

Tiong is also the managing director of listed the CCK Consolidated Holdings Bhd, which was founded by his father Datuk Tiong Su Kuok.

Dayang said in October that it may buy a strategic stake in Perdana Petroleum as part of a potential collaboration with the offshore marine support provider.

Perdana Petroleum now has a fleet of 22 offshore marine vessels comprising anchor-handling tug supply vessels, work barges, work boats and platform supply vessels.

Under the company's fleet expansion and renewal programme, 14 new vessels will be delivered over the next one to two years, Perdana Petroleum said on its website.



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Dayang to buy 10pc of Perdana Petroleum

Dayang Enterprise Holdings Bhd has accepted the offer to subscribe to 45.012 million new shares in Perdana Petroleum Bhd (PPB) via private placement.

The shares represented 10 per cent of the issued and paid-up capital in PPB, it said in a filing with Bursa Malaysia Securities.

It said the subscription price would be based on the volume-weighted market price for the five market days immediately preceding the price-fixing date and a discount of not more than five per cent but not less than the par value of PPB shares of 50 sen each.

PPB, with core business activity in offshore marine services, today rose half sen to close at 72 sen on Bursa Malaysia. Dayang said the proposed subscription was part of its plan to expand and diversify its business.

It said the proposed subscription would provide the opportunity to participate in potentially high-yielding contracts. Dayang said it would use internally-generated for the deal. -- Bernama



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New substantial shareholder in Perdana Petroleum

O&G INTEREST Sarawakian Tiong Chiong Hiiung's purchase of 8.15pc stake comes amid talk that rival Dayang Enterprise is looking to do the same

A Sarawakian chicken breeder has emerged as a substantial shareholder in oil and gas firm Perdana Petroleum Bhd.

Tiong Chiong Hiiung has bought an 8.15 per cent stake by virtue of his direct shareholding in Achiever Development Sdn Bhd.

Achiever is believed to be a vehicle of the Tiong family in Sarawak.

Tiong is also the managing director of the publicly-traded CCK Consolidated Holdings Bhd, a company founded by his father Datuk Tiong Su Kuok.

The elder Tiong currently serves as the non-executive chairman of CCK.

The Tiong family owns slightly above 36 per cent of CCK Consolidated via two private companies, namely Central Coldstorage Sarawak Sdn Bhd and S.K. Tiong Enterprise Sdn Bhd.

The emergence of the Sarawakian business man in Perdana Petroleum comes at a time when there has been speculation that a rival Sarawakian party is looking into buying a significant stake in the company.

Dayang Enterprise Holdings Bhd said in October that it may buy a strategic stake in Perdana Petroleum, as part of a potential collaboration with the offshore marine support provider.

Perdana Petroleum now has a fleet of 22 offshore marine vessels comprises anchor-handling tug supply vessels, work barges, work boats and platform supply vessels.

Under the company's fleet expansion and renewal programme, 14 new vessels will be delivered over the next one to two years, Perdana Petroleum said on its website.

For the six months ended June 30 2011, Perdana Petroleum posted revenue of RM140.35 million versus RM108.28 million in the same period a year ago.

Group pre-tax profit for the financial year in review, meanwhile, stood at some RM803,000 versus a pre-tax loss of RM30.67 million a year ago.

As for CCK, it recorded group-level revenue of RM391.97 million for the financial year ended June 30 2011, versus RM351.21 million a year ago.

Group pre-tax profit stood at RM25.53 million versus RM24.35 million before. The company has slightly more than RM25 million in the bank, its unaudited accounts revealed.



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Perdana Petroleum proposes private placement

Perdana Petroleum Bhd (Nov 16, 79.5 sen)
Maintain trading buy at 83.5 sen with target price of RM1.09: Perdana Petroleum has proposed to undertake a private placement of new shares, representing up to 10% of its existing issued shares. As at end-October, the company had an issued share base of 450.1 million and outstanding warrants of 61.4 million. If none of the outstanding warrants is exercised, the company may place out up to 45 million new shares. If all the outstanding warrants are exercised, it may place out up to 51.1 million new shares.

Assuming a placement price of 75 sen per share (representing a 4.2% discount to its five-day volume-weighted average price (VWAP), Perdana Petroleum may raise up to RM38.4 million of gross proceeds (or RM33.8 million under a minimum case scenario). The company intends to utilise the proceeds for working capital.

The corporate exercise is within market expectation and Dayang Enterprise Holdings Bhd (not rated) is purported to be the placee. To recap, on Oct 6, 2011, Perdana Petroleum announced in response to an article in The Edge weekly, Dayang may buy into Perdana Petroleum, that it was in exploratory/informal discussions with Dayang on strategic collaboration. During the discussion, the matter of financing was raised and Perdana Petroleum indicated that one of the ways the company may raise funds was to undertake a private placement. Dayang had indicated that it was interested in acquiring a strategic stake in the company.

We are neutral on the proposal. While the placement will be dilutive to earnings, we believe roping in Dayang is a decent strategic move and the cash proceeds (assuming placement price of RM0.75) will help lower the company’s net gearing ratio from 0.42 times to 0.33 times, thereby reducing its funding pressure. — Affin IB Research, Nov 16


This article appeared in The Edge Financial Daily, November 17, 2011.



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HDBSVR: Dayang could be potential investor in Perdana Petroleum

KUALA LUMPUR (Nov 16): Hwang DBS Vickers Research (HDBSVR) says Dayang Enterprise (Buy, RM2.70 TP) could be a potential investor in Perdana Petroleum’s (Perdana) proposed private placement of up to 10% of its shares.

It said on Wednesday the price will also be fixed at a later date after obtaining relevant approvals.

“We believe that Dayang Enterprise (Buy, RM2.70 TP) could be a potential investor given that both parties have announced earlier that they are exploring potential collaboration, including Dayang acquiring a strategic stake in Perdana,” it said.

HDBSVR said if that comes true, Dayang may be able to tap on Perdana’s new fleet of 13 vessels to bid for more topside maintenance and hook-up commissioning contracts going forward while Perdana may strengthen its balance sheet (net gearing of 42% as at 2Q11).

“We understand that Dayang is chartering a workboat from Perdana at the moment for its RM802 million Petronas contract secured back in February 2011,” it said.

Assuming that the Perdana shares are placed out to Dayang at yesterday’s closing price of 83.5 sen, Dayang has to fork out RM37.6 million which could be paid off with its cash pile of RM188 million as at 2Q11.



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CIMB Research has technical buy on Perdana Petroleum

KUALA LUMPUR (Oct 31): CIMB Equities Research has a technical buy on Perdana Petroleum at 70.5 sen at which it is trading at a FY12 price-to-earnings of 9.0 times and price-to-book value of 0.6 times.

It said on Monday, Perdana Petroleum broke out of its downtrend channel last week.

“We expect the bulls to take charge from here. If prices can continue to hold steady above the resistance-turned-support trend line, there is a good chance that prices may re-rate towards 74.5 sen and 79 sen,” it said.

CIMB Research said the rebound from its 55 sen low also lifted prices above its 30-day and 50- day SMAs. This, together with the rising MACD and RSI indicators, bode well for the stock.

“Any pullback is an opportunity to accumulate. However, always put a stop at between 69.5 sen and 67.5 sen depending on one’s risk appetite,” it said.