Maintain Neutral with unchanged target price (TP) of RM1.21
- Details. The 2 units of 500-men accommodation work barges are identified as Vessel Hull No. SK316 and SK317 from Nam Cheong International Limited. The Group via its wholly owned subsidiary, Petra Offshore Limited (POL) has on 1 December 2016 sent notification to NCIL of the cancellation of the MoA as NCIL has not fulfilled the condition of delivery of SK317 in accordance with the terms and conditions of the MoA. Accordingly, POL has sought for the immediate return of the deposit paid of USD8.4m (RM37.0m), as advised by the legal counsel.
- Impact. The cancellation of the MoA does not have any reasonably foreseeable material and adverse financial and operational impact on POL, except for the refund of the said deposit which will improve its cashflow. This will also aid in the effective management of Perdana’s portfolio for the longer-term, to ensure a higher fleet utilization and improved efficiencies such as streamlining its operations, while reducing its vessel utilization breakeven levels to a c.50% level.