PP 7767/09/2010(025354)

1 March 2010

Malaysia Corporate Highlights

RHB Research
Institute Sdn Bhd
A member of the
RHB Banking Group
Company No: 233327 -M

R e su l ts N o t e
1 March 2010
MARKET DATELINE

Petra Perdana Share Price

Fair Value
:
:
RM1.35
RM1.00
Dragged Down By Petra Energy Recom : Underperform
(Maintained)

Table 1 : Investment Statistics (PETRA; Code: 7108) Bloomberg: PETR MK

Net Core EPS Net
FYE Turnover profit EPS EPS# Growth# PER# C.EPS* P/NTA gearing ROE NDY
Dec (RMm) (RMm) (sen) (sen) (%) (x) (sen) (x) (x) (%) (%)
2009 605.7 29.3 9.8 9.8 (53.1) 13.8 11.0 0.8 0.1 6.0 1.1
2010f 305.9 23.8 8.0 8.0 (18.5) 17.0 19.0 0.8 (0.2) 4.7 1.1
2011f 369.1 50.9 17.1 17.1 113.5 8.0 25.0 0.7 (0.2) 9.4 1.1
2012f 392.4 75.0 25.2 25.2 47.3 5.4 - 0.6 (0.2) 12.5 1.1
Main Market Listing / Trustee Stock / Syariah-Approved Stock By The SC # Excl. EI * Consensus Based On IBES Estimates

RHBRI Vs. Consensus

♦ 4QFY09 results largely in line. FY09 net profit was in line with our Above
expectation but below market consensus, accounting for 95% and 81% of In Line
our and market full-year estimates respectively. 4QFY09 marine revenue Below
fell 26% yoy mainly due to: 1) declining charter rates (with average
Issued Capital (m shares) 297.6
charter rates for the 10-12k HP AHTS having slipped 35% yoy to around
Market Cap(RMm) 401.8
US$1.70-1.80); and 2) lower utilisation rates (4Q utilisation rates of 60% Daily Trading Vol (m shs) 1.3
vs. 70% in 4QFY08). However, on a qoq basis, 4Q revenue increased 9% 52wk Price Range (RM) 1.20-3.14
on 4Q utilisation rates of 60% vs. 50% in 3QFY09. Higher qoq for marine Major Shareholders: (%)
margin due to higher utilisation rates as well as higher operating cost in Tengku Ibrahim Petra 24.4
3QFY09 arising from mobilisation of newly-delivered Petra Ranger. Dato’ Henry Kho 7.2

♦ Petra Energy. However, Petra Energy’s FY09 core net profit of RM15.4m
was below our expectation, accounted for 43% of our full-year forecast. FYE Dec FY09F FY10F FY11F
EPS chg (%) (0.1) (3.6) (3.3)
The variance was largely due to lower-than-expected earnings contribution
Var to Cons (%) (14.9) (58.6) (25.5)
from RM1.1bn 4-year Shell Sarawak/Sabah contract arising from delayed
delivery of three new vessels (i.e. Petra Orbit, Petra Endeavour and Petra PE Band Chart
Galaxy) as well as higher expenses for dry docking of vessels.

♦ Medium-term outlook has deteriorated. We have previously PER

PER
=
=
21x
16x
highlighted that although 50% of the vessels demand arising from the PER = 11x
PER = 6x
replacement market is holding up, demand stemming from newer
requirement appears to remain weak (despite crude oil price stabilising at
around US$70/barrel). Futhermore, we believe lease charges and related
costs would likely impact FY10 earnings given mobilisation costs for the
eight vessels (with six vessels from China shipyard) as well as lease
Relative Performance To KLCI
charges arising from potential delay in securing contracts for these vessels.

♦ Forecasts. We have cut our FY10-11 core EPS forecasts by 3.6% and
3.3% respectively after adjusting factoring in lower contribution from
Petra Perdana
brownfield services. We have introduced our FY12/12 earnings projection.

♦ Investment case. Following our earnings revision, our fair value is FBM KLCI
trimmed slightly to RM1.00/share (from RM1.02/share previously), which
is based on unchanged 13x FY10 PER. We highlight that we have forecast
significant earnings recovery in FY11, but in the absence of better numbers
from Petra Energy, we are still looking at a core net profit that is lower
than that of FY08. Therefore, investors may need to be holders at least for
another two years before we see earnings return to previous levels. Hence,
Wong Chin Wai
we reiterate our Underperform call on the stock for now.
(603) 92802158
Please read important disclosures at the end of this report. wong.chin.wai@rhb.com.my

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Table 2: Quarterly Review

QoQ YoY
FYE Dec (RMm) 4Q08 3Q09 4Q09 FY08 FY09 YoY (%) Comments
(%) (%)
68.8 46.4 50.7 9 (26) 219.5 227.9 4
Marine Lower yoy due to: 1) declining charter
rates (with average charter rates for the
10-12k HP AHTS having slipped 35% yoy
to around US$1.70-1.80); and 2) 4Q
utilisation rates of 60% vs. 70% in
4QFY08). Higher qoq due to higher
utilisation rate given 3QFY09 utilisation
rates of 50%

152.0 110.3 68.6 (38) (55) 474.7 377.6 (20)

Petra Energy Lower qoq and yoy due to lower
contribution from Shell Sarawak/Sabah
arising from delay in delivery of vessel.

0.2
Others
220.9 156.7 119.4 (24) (46) 694.3 605.7 (13)
Revenue
35.1 15.8 24.6 56 (30) 171.9 130.3 (24)
EBITDA Higher qoq for marine due to higher
utilisation rates as well as higher
operating cost in 3QFY09 arising from
mobilisation of newly-delivered Petra.

15.9% 10.0% 20.6% 24.8% 21.5% (13)

Margin (%)
(10.9) (11.8) (13.4) 13 23 (42.4) (49.0) 15
Depreciation Stable depreciation.

(9.7) (6.8) (6.6) (3) (32) (32.7) (32.7) (0)

Net interest Net debt decreased to RM265m at end-
Dec 09 vs. RM409m at end-Sep 09.

22.5 - n.m (100) 22.5 - (100)

Excep items 4Q08 included RM22.5m gain from the
disposal of IOS Andari 2.
(0.7)
Associates
3.8 (9.5) 5.0 152 31 38.8 22.3 (43)
Marine PBT Higher qoq marine margin as 3QFY09
was affected by lower vessels utilisation
as four vessels (i.e. IOS Captain, IOS
Champion, IOS Victory and IOS Glory)
were idle, and higher operating cost
arising from mobilisation of Petra Ranger
in Jul 09.

10.7 6.6 (0.3) (105) (103) 58.0 26.4 (54)

Petra Energy Lower Petra Energy margin qoq due to
PBT higher contribution from lower-margin
brownfield services as well as dry
docking of vessels
37.0 (2.9) 4.7 (261) (87) 119.3 48.7 (59)
Total PBT
(5.3) (5.2) (0.3) (94) (94) (14.9) (12.4) (17)
Tax
36.5% - 6.5% 12.5% 25.4% 103
Eff. tax rate (%)
179.9
%
(3.5) (0.9) (0.3) (65) (91) (16.9) (7.0) (58)
Minorities Lower qoq and yoy as Petra Energy is
now an associate
28.3 (8.9) 4.1 (145) (86) 87.7 29.3 (67)
Net profit
5.8 (8.9) 4.1 (145) (30) 62.4 29.3 (53)
Core net profit
(291) (409) (265) (35) (9)
Net cash/(debt)
0.5 0.7 0.5 (35) (12)
Net gearing (x)

Source: Company, RHBRI

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Table 3. Sum-Of-Parts Fair Value Calculation

Fair Value
(RMm)
Marine (based on 13x FY10 PER) 245.7
Petra Energy (29.6% share of FV, based on 11.7x FY10 PER - 10% discount to peers) 52.0
Total 297.7
SOP fair value per share (RM) 1.00
Share price (RM) 1.35
Upside (%) (26)
Source: RHBRI estimate

Table 4. Earnings Forecasts Table 5. Forecast Assumptions

FYE Dec (RMm) FY09 FY10F FY11F FY12F FYE Dec FY10F FY11F FY12F
Marine 218.3 305.9 369.1 392.4 AHTS available fleet capacity (hp) 170,094 185,094 185,094
Engineering 564.0 - - - Avg capacity utilisation (%) 75.0 79.3 79.3
Revenue 605.7 305.9 369.1 392.4 Avg charter rate (US$/hp/day) 2.24 2.38 2.57

EBITDA 94.8 65.9 86.3 106.1 Source: Company data, RHBRI estimates
EBITDA margin (%) 15.7 21.5 23.4 27.0
Net interest expense (12.2) (10.1) (8.7) (5.6)
Depreciation (24.4) (36.5) (36.4) (37.5)
Excep items - - - -
Associate - PEnergy (0.7) 4.9 10.0 12.4
Pre-tax profit 48.7 24.2 51.2 75.4
Tax (12.4) (0.3) (0.3) (0.4)
Effective tax rate (%) 25.5 1.3 0.6 0.5
MI (7.0) - - -

Net profit 29.3 23.8 50.9 75.0

Core net profit 29.3 23.8 50.9 75.0
Growth (%) (53.1) (18.5) 113.5 47.3
Source: Company data, RHBRI estimates

IMPORTANT DISCLOSURES

This report has been prepared by RHB Research Institute Sdn Bhd (RHBRI) and is for private circulation only to clients of RHBRI and RHB Investment Bank Berhad
(previously known as RHB Sakura Merchant Bankers Berhad). It is for distribution only under such circumstances as may be permitted by applicable law. The
opinions and information contained herein are based on generally available data believed to be reliable and are subject to change without notice, and may differ or
be contrary to opinions expressed by other business units within the RHB Group as a result of using different assumptions and criteria. This report is not to be
construed as an offer, invitation or solicitation to buy or sell the securities covered herein. RHBRI does not warrant the accuracy of anything stated herein in any
manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against RHBRI. RHBRI and/or its associated persons
may from time to time have an interest in the securities mentioned by this report.

This report does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives
of persons who receive it. The securities discussed in this report may not be suitable for all investors. RHBRI recommends that investors independently evaluate
particular investments and strategies, and encourages investors to seek the advice of a financial adviser. The appropriateness of a particular investment or
strategy will depend on an investor’s individual circumstances and objectives. Neither RHBRI, RHB Group nor any of its affiliates, employees or agents accepts
any liability for any loss or damage arising out of the use of all or any part of this report.

RHBRI and the Connected Persons (the “RHB Group”) are engaged in securities trading, securities brokerage, banking and financing activities as well as providing
investment banking and financial advisory services. In the ordinary course of its trading, brokerage, banking and financing activities, any member of the RHB

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Group may at any time hold positions, and may trade or otherwise effect transactions, for its own account or the accounts of customers, in debt or equity
securities or loans of any company that may be involved in this transaction.

“Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding company and the respective directors,
officers, employees and agents of each of them. Investors should assume that the “Connected Persons” are seeking or will seek investment banking or other
services from the companies in which the securities have been discussed/covered by RHBRI in this report or in RHBRI’s previous reports.

This report has been prepared by the research personnel of RHBRI. Facts and views presented in this report have not been reviewed by, and may not reflect
information known to, professionals in other business areas of the “Connected Persons,” including investment banking personnel.

The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensation based
upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.

The recommendation framework for stocks and sectors are as follows : -

Stock Ratings

Outperform = The stock return is expected to exceed the FBM KLCI benchmark by greater than five percentage points over the next 6-12 months.

Trading Buy = Short-term positive development on the stock that could lead to a re-rating in the share price and translate into an absolute return of 15% or more
over a period of three months, but fundamentals are not strong enough to warrant an Outperform call. It is generally for investors who are willing to take on
higher risks.

Market Perform = The stock return is expected to be in line with the FBM KLCI benchmark (+/- five percentage points) over the next 6-12 months.

Underperform = The stock return is expected to underperform the FBM KLCI benchmark by more than five percentage points over the next 6-12 months.

Industry/Sector Ratings

Overweight = Industry expected to outperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Neutral = Industry expected to perform in line with the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Underweight = Industry expected to underperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

RHBRI is a participant of the CMDF-Bursa Research Scheme and will receive compensation for the participation. Additional information on recommended
securities, subject to the duties of confidentiality, will be made available upon request.

This report may not be reproduced or redistributed, in whole or in part, without the written permission of RHBRI and RHBRI accepts no liability whatsoever for the
actions of third parties in this respect.

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