RHB lowers Petra Energy's earnings forecast

Stock Name: PENERGY
Company Name: PETRA ENERGY BHD

Research House: RHB

Price Call: HOLD

Target Price: 1.95

RHB Research has lowered its forecast on Petra Energy Bhd's 2013-2014 earnings by 15 per cent and 5.6 per cent, respectively, given the group's lower-than-expected net profit.

Petra Energy's RM2.2 million net profit for the first quarter ended March 31, 2013 accounted for only eight per cent of RHB Research's full-year projection.

For the first quarter, the group posted RM92.4 million revnue, down 29.6 per cent year-on-year on weaker-than-expected contributions from its main business segments.

Its integrated brown field maintenance and engineering division's revenue plunged 30.7 per cent year-on-year due to lower utilisation of vessels, resulting in a pre-tax loss of RM7.3 million versus RM3.1 million pre-tax profit in the same period last year.

RHB Research maintained 'neutral' call with a target price of RM1.95.-- Bernama

Affin raises Petra Energy to 'add'

Stock Name: PENERGY
Company Name: PETRA ENERGY BHD

Research House: AFFIN

Price Call: TRADING BUY

Target Price: 1.95

Affin Investment Bank raised its call on oil and gas services firm Petra Energy Bhd to "add" from "reduce", citing stronger earnings growth from its recently acquired service contracts.

The research house lifted its earnings forecast for the financial years of 2013 and 2014 by 23.9 percent and 38.3 percent after pencilling in profit contributions from the Kapal, Banang, Meranti (KBM) risk service contract and the Gumusut-Kakap offshore service contract.

Affin also revised Petra Energy's target price to RM1.95 from RM1.62 previously. -- Reuters

PENERGY (FV RM1.50 - BUY) Corporate News Flash: Holding Hands With Baker Hughes

Stock Name: PENERGY
Company Name: PETRA ENERGY BHD

Research House: OSK

Price Call: BUY

Target Price: 1.50

THE BUZZ

Yesterday, Petra Energy announced that it had entered into aMemorandum of Understanding  (MOU) withBaker Hughes (M) SB to undertake oil and gas projects in Malaysia. The MOU willgive Petra Energy a solid platform to vie for various projects in the  local O&G value chain.  Under the MOU, both parties will co-operate to provide capability developmentservices, including deploying their respective expertise and knowledge inO&G projects for operators in Malaysia.

OUR TAKE

A short take on  BakerHughes. Baker Hughes is one of the world's  top-tier oilfield servicecompanies that assists O&G operators to make the most out of theirreservoirs via high-performance drilling, evaluation, completion and productiontechnology and services as well as integrated operations and reservoirconsulting. Ultimately, the O&G operators will see the benefits of  Baker Hughes's services  in the form of  lower production costs, lower operating risksand  higher productivity  in their projects.  Baker Hughes's scope of work covers deepwateras well as unconventional hydrocarbons, apart from conventional hydrocarbons.As a group, it has about 57k employees in more than 80 countries.

A potential  foreign partner in  future marginal oilfields? We would notbe surprised if this happens because: (i) Petra Energy's management had earlierindicated its intention to participate in the marginal oilfield developmentprogramme spearheaded by Petronas, and (ii) Baker Hughes fits the criteria  as  oneof  Petra Energy's foreign partnerssince  the former has the technology andexpertise in drilling evaluation and reservoir development. However, webelieve  Baker Hughes is  unlikely be Petra Energy's  only foreignpartner since  such a  partnership should also involve O&Goperators responsible  for getting the O&Gout of the reservoir. 

Positive news but nochange to FY12-FY13 earnings forecasts. As the partnership is currently atthe MOU stage, we are still unsure of what developments lie ahead, as well as thepotential  earnings contribution  from such developments  to Petra Energy going forward. Having saidthat, we  believe this MOU will bepositive for the company and its efforts to move up the value chain beforeparticipating in marginal oilfield developments.

Maintain Buy. Ourfair value for Petra Energy remains unchanged at RM1.50 based on the existingPER of 13x FY12 earnings. We think that after carrying out a 'kitchen-sinking' last  year, the company should expect betterfinancial performance  moving forward. Wealso believe that all the company has made all the necessary provisions and write-offsto incorporate the true and fair valuation of  all its existing projects todate. Ultimately, we expect the company to deliver consistent quarterlyperformance as it can now focus on its core business in the provision ofbrownfield services, which provide stable and recurring income.

Source: OSK188

OSK cuts Petra financial forecasts

Stock Name: PENERGY
Company Name: PETRA ENERGY BHD

Research House: OSK

Price Call: BUY

Target Price: 1.77

OSK Research Sdn Bhd has downgraded Petra Energy Bhd's financial years 2011-2012 forecasts by 13-16 per cent.

It said this was in line with the company's lower than-expected performance for the first half of financial year 2011 (1HFY11) coupled with the expected slow performance going forward following the slowdown in the global economy which may result in lower energy demand and hence oil and gas activities too.

"The 1HFY11 results were below consensus and our expectations, making up 28 per cent and 38 per cent of the financial year 2011 forecasts respectively," it said in a note today.

OSK Research said it would maintain its 'buy' call on the company with a revised fair value to RM1.77 from RM2.34 previously. -- Bernama

PENERGY - Affin Research maintains Buy on Petra Energy

Stock Name: PENERGY
Company Name: PETRA ENERGY BHD
Research House: AFFIN

KUALA LUMPUR: Affin Investment Bank Bhd Research has maintained its Buy call on PETRA ENERGY BHD [] after the company signed a MOU with Labuan Shipyard & Engineering Sdn Bhd to utilize Labuan Shipyard's facilities at Victoria Harbour, Labuan for its fabrication activities.

Under the MOU, the two parties may also explore areas for cooperation to collaborate on projects pertaining to leasing of fabrication yards, fabrication works and storage facilities.

Affin Research said in a note Friday, June 3 that it was neutral on the signing of the MOU as it was an ordinary business arrangement that allows Petra Energy to lease the required yard space to support its RM400m Petronas Carigali HUC work at a stable, pre-agreed rental rate.

'We maintain our Buy rating on Petra Energy with an unchanged TP of RM1.89, based on 12x CY12 PE.

'We continue to like Petra Energy given: (i) our expectation for more HUC, topside maintenance jobs to be awarded in FY11-12; (ii) Petra Energy's established track record in integrated brown field services give them a competitive advantage in contract bidding; and (iii) its RM900m unbilled sales provide visible contract billings for the next 2 years.

PENERGY - OSK still 'overweight' on O&G sector

Stock Name: PENERGY
Company Name: PETRA ENERGY BHD
Research House: OSK

OSK Research has maintained its overweight position on the local oil and gas (O&G) sector as it believes the impact on the crude oil price will not be so severe due to tensions in Egypt.

Its top "buy" picks are Kencana with a target price of RM3.05, Petra Perdana RM1.57, Petra Energy RM2.16 and Alam Maritim RM 1.80.

In a research note today, OSK said, a minimal local O&G companies have exposure in the Middle East. "So far, we can think of only two that have exposure in the Middle East, but then again they are not in Egypt," it added.

The companies are KNM, which has manufacturing plants in Saudi Arabia and Dubai and Alam Maritim, that has chartered some vessels to Middle Eastern customers.

"We do not see the threat of unrest affecting its activities as they are in different geographical locations, one on land and the other in water," it explained.

It also remained unchanged on the oil price assumption for 2011 and 2012 at US$80-US$90 per barrel and US$90-US$100 per barrel respectively.

"However, we may increase our range in the event there is significant and prolonged unrest in the Middle East or if it spreads across a few countries with high petroleum reserves," the research house said.

Following a period of tension, Egyptian president Hosni Mubarak stepped down recently, which somewhat capped the surge in oil price. -- Bernama