The Bank of Russia unexpectedly maintained its key interest rate at a record-high 21% , defying analysts’ expectations of another significant hike as inflation remains stubbornly elevated. The decision marks a shift toward a more measured approach in balancing economic growth and price stability. Key Details Inflation Concerns: Annual inflation climbed to 8.9% in November, well above the central bank’s 4% target , with inflation expectations reaching 13.9% in December. Policy Rationale: The central bank cited the significant tightening of monetary conditions after October’s 200-basis point hike as sufficient to resume disinflationary processes. Governor Elvira Nabiullina emphasized avoiding both economic overheating and severe slowdowns. Economic Overheating: Elevated government spending on the war in Ukraine and social programs, coupled with labor shortages and rising wages, have fueled strong domestic demand, exacerbating price pressures...
Maintain Neutral with unchanged target price (TP) of RM1.21
Following the anticipated termination or cancellation of the Memorandum of Agreement (MoA) for one unit 500-men accommodation work barge SK316 in March this year, Perdana has announced the cancellation of the second MoA with Nam Cheong International Limited (NCIL), for another unit of 500-men accommodation work barge SK317. The cancellation is pertaining to NCIL not having fulfilled the condition of delivering the Vessel in accordance with the terms and conditions of the MoA. The Group is therefore seeking the immediate return of the deposit paid of USD8.4m (RM37.0m), as advised by the legal counsel. The total consideration of the SK317 is USD84.0m. We continue to rate Perdana with a Neutral call with an unchanged TP of RM1.21 upon the removal of suspension, based on our DCF approach using a 10.9% WACC.
- 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.
Source: PublicInvest Research - 02 December 2016
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