Petra Perdana/SapCrest ... Dec10

Petra Perdana’s share price should have hit bottom (0.74) after consolidating for some two months.

Going forward, the appreciation in its share price would be news-driven.

Petra had successfully completed its three-for-eight rights issue exercise, which had been viewed negatively by some investors.

Also, there is unlikely to be a further downgrade by MARC on its RM800 million dual currency revolving facility in the immediate term since the rating was done just recently.

Finally, the 2QFY10 quarter was possibly the worst for the company when it reported a net loss of RM33 million. It managed to improve its performance in 3QFY10 by narrowing the loss by 28% quarter-on-quarter (q-o-q).

It had awarded hook-up and commissioning job worth RM400 million to its 29.6% associate, Petra Energy, which may be chartering workbarges and workboats from Petra Perdana since most of Petra Energy’s vessels are currently busy servicing its Shell maintenance contract and the award of marginal oilfield contracts such as the Sepat oilfield to its associates’ competitors which may not have enough assets to support those operations giving rise to demand for the company’s workbarges and workboats.

Also the Employees Provident Fund acquired 254,200 shares on Nov 25 2010, and raised its stake in the company to 41.77 million shares representing 9.09% direct and 0.19% interests.

Sources also say SapCrest has hired investment bankers to look into a potential asset

expansion exercise that includes the possibility of acquiring oil and gas companies.

The bakers are working on the job, the possible scenarios they are looking into include acquiring loss making oil and gas players such as Petra Perdana Bhd.

SapCrest is sitting in a net cash position. The company had cash of rm691 million while borrowings stood at rm614 million as at July 30, 2010. That leaves it with rm76.3 million.

On top of its net cash position, SapCrest is also ringing in good profits.

SapCrest substantial shareholders have also been picking up the stock. EPF had increased its stake to 8.22%.

Meanwhile it was reported that deep water development in the sector is expected to take off, with projects in the pipeline. Perhaps with potential jobs coming in from that segment, SapCrest could be looking at acquiring deep water assets.

SapCrest could be looking at expanding its business capacity by acquiring another player.

In July 2010, Petra Perdana placed out 10% of its shares to shipbuilder Nam Cheong Dockyard Sdn Bhd at RM1.32 per share. The company has also undertaken a rights and warrants issue. Assuming Nam Cheong takes up the right and warrants, its cost into Petra Perdana would translate into rm1.12 per share.

The company has a 29.6% stake in Petra Energy Bhd.