On 24 Dec 2013, we wrote that Perdana had taken delivery of its 16th vessel, a work barge named Perdana Protector. We understand that the company is likely to add at least two more vessels to the two new work barges, namely, Perdana Resolute and SK312, we had expected for this year (Figure 1). Perdana Resolute and SK312 have been earmarked to work for the company's largest shareholder, Dayang (DEHB MK, Not Rated). 

We are thrilled that Perdana is swiftly expanding its fleet, clearly taking advantage of the increase in charter and utilisation rates. The company currently fetches a charter rate of around US$2/HP for a 5,000HP anchor handling tug supply vessel, higher than US$1.50-1.80 netted last year. Meanwhile, the company's utilisation rate shot up to a robust 83% in 3Q13 from an estimated 74% in 3Q12. There is definitely room for expansion as Perdana's net gearing stood at only 0.6x as at 30 Sep 2013. Furthermore, we are encouraged that there is potentially a ready customer for the new vessels. We understand that Dayang is likely to charter at least one of the new vessels on a long-term basis. Currently, around 65% of Perdana's working vessels are on long-term charters, which help to provide stability to the company's earnings. A new work barge could chip in around RM5m in net profit p.a. 

Accumulate the stock and ride the wave of improvement in Perdana's operating environment. After a strong earnings turnaround in FY13, we expect the positive momentum to continue in FY14 as the company expands its fleet. With an average age of less than four years, the company's fleet is among the youngest in Malaysia's marine support space.

Source: CIMB Daybreak - 10 January 2014, Full PDF Report