Petra Perdana Bhd

Below is the daily report from HBDS:

Petra Perdana: Better earnings visibility with newly acquired
vessels
(Buy; PETR MK; RM4.94)

􀂾 Story: Petra is acquiring five new vessels for RM323.5m. The
new vessels provide better earnings visibility and they are well
positioned to benefit from the growing demand for offshore
vessels and rising vessel charter rates.

􀂾 Point: The new vessels will be placed under the sale and
leaseback arrangement. Assuming an average charter rate of
US$1.8/bhp for FY08-09, we estimate an average EBIT margin of
31% from the new vessels. We have upgraded our FY08-09 net
profit forecast by 8% and 7%, respectively to factor in the
contribution from the new vessels.

􀂾 Relevance: We expect Petra’s gearing to remain stable at 1.3x
for FY07 and 1.2x for FY08. We reiterate our BUY rating for
Petra with an SOP-derived target price of RM6.40/share based on
targeted 20x FY08 PER for marine services. The key re-rating
catalysts for Petra are:- (i) rising charter rates, (ii) expanding fleet
size; and