Pan-Malaysia orderbook should fortify Petra Energy’s services segment, risks involved

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Photo shows a Petra Energy vessel near an oil rig. Petra Energy is expected to have realised only RM880 million worth of jobs under the Pan-Malaysia cluster in 2013 to 2015, leaving another RM1,620 million worth of orders to be realised in 2016 to 2018E.

Photo shows a Petra Energy vessel near an oil rig. Petra Energy is expected to have realised only RM880 million worth of jobs under the Pan-Malaysia cluster in 2013 to 2015, leaving another RM1,620 million worth of orders to be realised in 2016 to 2018E.

KUCHING: While the Pan-Malaysia orderbook should underpin Petra Energy Bhd’s (Petra Energy) services segment, Affin Hwang Investment Bank Bhd (Affin Hwang) has noted that there are risks involved.

According to Affin Hwang, Petra Energy is one of the leading service providers for hook-up, commissioning (HuC) and topside-major maintenance (TMM) in Malaysia.

“Pursuant to the corporate reorganisation which took place in late-2014, contribution from HuC and TMM services are currently lumped together with the design, fabrication, supply and installation business under the company’s “bread-and butter” services segment,” it said.

The research firm estimated the segment made up 89 per cent of the group’s topline in 2015.

Affin Hwang noted that Petra Energy’s HuC and TMM businesses are derived solely from Malaysia, with Petroliam Nasional Bhd (Petronas) and Shell Malaysia accounting for circa 90 per cent of the segment’s revenue.

It further noted that Petra Energy’s key competitor for the HuC and TMM business is Dayang Enterprise Holdings Bhd.

“In 2013, Petra Energy bagged a five-year contract from Petronas Carigali Sdn Bhd (Petronas Carigali) for the provision of HuC and TMM services in offshore Sabah and Sarawak, which we understand to be reportedly worth RM2.5 billion.

“The contract, which was awarded on May 21, 2013, is expected to end in May 2018,” Affin Hwang said.

Thus far, the research firm estimated Petra Energy to have realised only RM880 million worth of jobs under the Pan-Malaysia cluster in 2013 to 2015, leaving another RM1,620 million worth of orders to be realised in 2016-18E.

“This is sufficient to tide the segment through 2018E, even if Petra Energy fails to win any new contracts,” it added.