The research arm of Kenanga Investment Bank Bhd (Kenanga Research) expected the share price to be traded at a much lower range from Perdana’s last traded price of RM1.54 before its suspension after book value declined by 20 per cent with accumulated RM160 million losses in past two years, still tough prospects with below break-even utilisation for financial year 2017-2018 estimate (FY17-18E) and offshore support vessel (OSV) peers trading at 0.2 to 0.5-fold price to book value (PBV).

“Note that the reference price of Perdana for the distribution of dividend in specie by Dayang is set at RM0.96, equivalent to its FY16 BV per share,” Kenanga Research said.

“As of the third quarter of 2017 (3Q17), its BV per share has dropped further to RM0.72 due to its loss-making first nine months of 2017 (9M17) results and RM50 million impairment.”

As part of Kenanga Research’s Dayang’s sum of parts (SOP) valuation, the research arm valued Perdana at RM0.25 per share pegged to 0.4-fold FY18 PBV which implied 84 per cent and 65 per cent downside to its last traded price of RM1.54 and its 3Q17 BV per share.

Today (19 Dec 2017) – it has fallen to a low of RM0.36 per share.

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I may be wrong but I do believe there may be a potential turnaround story here……………

As per one of the recent announcements by Perdana Petroleum:

  • On-going support and cross-synergies with its parent, Dayang
  • As long as crude oil is above $60, Perdana should be ok… (currently, brent is at around $63.62)
  • On-going cost optimisation and rationalisation effort
  • De-gearing via proceeds from proposed placement exercise

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At the end of the day, one needs to ascertain whether the Company has sufficient operating cashflow to meet its recurring debt service obligations and how much financial / other forms of support can Dayang extend to Perdana. To complicate matters, given the recent sell-down of the company by investors, the Company has to convince investors to subscribe into the proposed equity placement within the next 6 months.

 

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