ANALYSTS are negative on Petra Perdana's sale of its 25 per cent stake in subsidiary Petra Energy as it may affect its ability to perform in the future.
OSK Research said although Petra Energy's business of providing brownfield services may not be one of high growth, but at least it provides a stable business to the group.
"The disposal however would enable Petra Perdana to raise RM93.2 million cash to repay about 51 per cent of its borrowings and the cash may be crucial given the group's sluggish vessel operation with an estimated utilisation rate of below 50 per cent due to a lack of contracts to generate the cash to repay borrowings and maintain operations.
"We are downgrading our 2010 earnings forecast by 20 per cent in line with the lower contribution from Petra Energy and have a neutral recommendation for Petra Energy," said OSK Research in a note to investors.
Last Friday, Petra Perdana announced that it has sold 25 per cent or 48.8 million shares in subsidiary Petra Energy at RM1.91 a share by way of a direct business transaction to repay its short-term borrowings.
It did not identify the buyer but there are rumours that it could be Sarawakian businessman Datuk Bustari Yusof.
According to the announcement, the disposal was aimed at reducing Petra Perdana's bank borrowings and other financial obligations.
As at third quarter 2009, its short-term and long-term borrowings stood at RM183.4 million and RM345.4 million respectively.
Meanwhile ECM Libra is concerned with the two companies' inter-company transactions. This refers to how Petra Perdana will charter vessels for Petra Energy now that the latter is split.
"Typically, Petra Energy charters vessels from Petra Perdana and this generates some RM40 million-50 million per quarter in revenue," it said in a report.
With the sale, there is concern that Petra Energy could choose other vessels.
"With the eventual loss of steady income flow from Petra Energy, we have increasing doubts on Petra's ability to perform.
"Their vessels are fetching low rates while their operating lease commitments are growing with the delivery of new vessels," ECM Libra said in its research note, giving a "sell" recommendation to investors. |
