Dayang’s Perdana relists, selldown expected

KUCHING: Dayang Enterprise Holdings Bhd’s ( Dayang) Perdana Petroleum Bhd ( Perdana) which has relisted and resumed training yesterday, is expected by analysts to have a selldown.

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 mi l lion 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.

“Following that, Perdana is targeting to complete its 10 per cent private placement within the next six months whereby the proceed will be used as working capital and repay borrowings.

“This would lower down Dayang’s effective stake in Perdana to 55 per cent,” the research arm said.

Kenanga Research noted that Perdana is expected to stay in the red for financial year 2017 ( FY17) as the group’s 9M17 core net losses was at RM62 million with an average utilisation rate of 53 per cent.”

The research arm further noted that moving forward, Perdana is looking to improve its vessel utilisation to more than 80 per cent premising on the strategy tie-up with Dayang, orderbook of RM237.7 million (two to three years visibility) and tenderbook valuing from RM270 million to RM350 million (14 new charter contracts ranging from three months to five years) in Malaysia and Asean region.

Despite the expected downside pressure for Dayang, the group’s 55 per cent stake in Perdana makes merely 16 per cent (circa RM0.12) of Kenanga Research’s SOP.