5 October 2011

Page 1 of 3
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Table 1 : Oil And Gas Sector Valuations
FYE Price
Fair
value
EPS
(sen)
EPS growth
(%)
PER
(x)
P/NTA
(x)
P/CF
(x)
NDY
(%) Rec
(RM/s) (RM/s) FY12 FY13 FY12 FY13 FY12 FY13 FY12 FY12 FY12
Perdana
Petroleum Dec 0.62 0.60 6.6 9.5 92.1 45.5 9.6 6.6 0.6 3.6 3.2 MP
Dayang Dec 1.52 1.55 15.5 17.5 10.2 12.3 9.8 8.7 1.4 8.4 3.1 MP
Sector Avg 7.9 7.3 15.3 14.3
Sector Avg (excl Pet Gas) 7.9 7.4 14.8 13.7

Still in discussions. Dayang and Perdana announced yesterday, that whilst
there had been exploratory and informal discussions, nothing firm had been
reached between the parties beyond the normal course of vessel chartering
activities. This was in response to The Edge weekly newspapers recent
article highlighting a possible M&A between the two companies.
No surprises. We are not surprised by this news as we had previously
mentioned that: 1) Dayang is on the look-out for possible acquisitions/tie-
ups given that it is sitting on a net cash position of RM131.9m as at 1HFY11
after divesting its stake in Borcos in Nov-10; and 2) The still weak charter
environment and significantly low valuations make offshore vessel owners
the prime candidates for any M&As.
Eyeing Perdana Petroleums accommodation vessel fleet. We believe
that the main driver for the tie-up is Perdana Petroleums accommodation
vessel fleet (refer to Table 3) which fits in with Dayangs brownfield work
(topside maintenance and hook-up and commissioning). We also understand
that Dayang is looking to tender for up to RM5bn jobs in FY12. Hence, a tie-
up would allow for quick access to additional vessels. Dayang currently has
five workboats (inclusive of one that is under construction).
Pricing will be key issue. Perdana Petroleums share price has fallen to
RM0.62/share which translates to only 0.6x P/BV (based on its 1HFY11
BV/share ratio of RM1.10). This is significantly below the companys average
historical 1-yr forward P/BV ratio of 2x. Assuming a 5% discount to the latest
price, a 10% private placement would raise just RM26.5m for Perdana. This
makes up only 10% of Perdana Petroleums debt commitments of RM267.7m
as at 1HFY11. This might not be sufficient for Perdana Petroleum in terms of
its debt commitments (refer to Table 6). However, it will be worth it for
Dayang if the company gets first rights of refusal to charter could be worth it
for Dayang if it gets first rights of refusal to charter Perdanas vessels.
Maintain Market Perform. We believe the tie-up is beneficial for the long-
term prospects of both companies and foresee some near-term excitement
for the share prices of both stocks. However, in the medium term we expect
fears of a protracted downturn in the global economy to cap valuations for oil
and gas stocks, especially those that are small cap like Dayang and Perdana
Petroleum. We maintain respective fair value estimates for both stocks until
a firm announcement has been made.





Corporate Highlights


Sector Update

Oil And Gas
Tie Up Between Dayang And Perdana Petroleum? M
a
l
a
y
s
i
a

5 October 2011

Recom : Neutral
(Maintained)

M
A
R
K
E
T

D
A
T
E
L
I
N
E

P
P

7
7
6
7
/
0
9
/
2
0
1
2
(
0
3
0
4
7
5
)

RHB Research
Institute Sdn Bhd
A member of the
RHB Banking Group
Company No: 233327 -M
Table 2. Basis For Fair Value Estimates
Company Valuation Basis
Dayang 10x FY12 PER
Perdana
Petroleum
0.5x P/NTA
Source: RHBRI































Yap Huey Chiang
(603) 92802239
yap.huey.chiang@rhb.com.my


Please read important disclosures at the end of this report.
5 October 2011



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Table 3. Listed Offshore Marine Vessel Companies And Respective Market Capitalisation
Companies Share Price Market Cap No. of shares
Tanjung Offshore 0.755 220.41 291.94
Perdana Petroleum 0.615 276.82 450.12
Alam Maritim 0.700 551.05 787.21
Source: Bloomberg, Company; RHBRI



Table 4. Perdana Petroleum's Work Barge & Work Boat Fleet
Vessel No. of Pax Comments
Petra Enterprise 200
Petra Excelsior 300
Petra Liberty 169
Petra Sovereign 169
Petra Superior 300
IOS Jaguar 85
Petra Odessy Yet to be delivered
Source: Company

Table 5. Dayangs Work Boat Fleet
Vessel Built in Comments
Dayang Pertama 2005
Dayang Berlian 2007
Dayang Nilam 2008
Dayang Zamrud 2009
Dayang ??? Under Construction
Source: Company

Table 6. Perdana Petroleums Debt Commitments (as at 1HFY11)
RM'm
Short Term Borrowings 116.56
Long Term Borrowings 151.2
267.7
Source: Company


Figure 1. Perdana Petroleum Share Price Trend
-
0.20
0.40
0.60
0.80
1.00
1.20
1.40
Jan-
11
Feb-
11
Mar-
11
Apr-
11
May-
11
Jun-
11
Jul-
11
Aug-
11
Sep-
11
Oct-
11
R
M
/
s
h
a
r
e

Source: Bloomberg, RHBRI




5 October 2011



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