KUALA LUMPUR: Dayang Enterprise Holdings Bhd will re-evaluate Perdana Petroleum Bhd’s future business direction after the former raises its equity stake in the latter, said Datuk James Ling, executive deputy chairman of Dayang.

“We have to discuss first. It is difficult for me to comment now… if it is necessary to change, we will change. If the business is doing well, then I don’t think there is a reason to change, is there?” said Ling, who is Dayang’s board representative at Perdana (fundamental: 1.3; valuation: 1.4).

Meanwhile, Ling acknowledged that Petroliam Nasional Bhd’s (Petronas) announcement to renegotiate for lower charter rates in the offshore supply vessel market due to lower crude oil prices may impact Perdana’s earnings.

But he pointed out that the impact is industry-wide and not unique to Perdana.

Thus far, the group has agreed to provide discounts in one or two of its charter contracts, which Ling said Perdana had “more or less” recouped most of its investments.

However, the group may find it difficult to provide discounts for newly secured charter contracts as the investment recoupment is huge, according to Ling.

“They (Petronas) ask us to reduce the rates a lot, [but it is] very difficult because we have invested big money and have not recovered it,” he said.

Meanwhile, Perdana yesterday announced that its net profit for the first quarter ended March 31 plunged by 60% to RM8.64 million from RM22 million a year ago.

Revenue contracted 20% to RM69.5 million, compared with RM87.3 million a year ago.

In a filing with Bursa Malaysia yesterday, the group said the steady decline in profits and revenue was due to lower vessel utilisation from the slower work orders and contract awards from the oil majors caused by the low crude oil price.

On Dayang’s equity stake, last week, Dayang (fundamental: 2.7; valuation: 2.1) announced it had entered into a conditional share sale agreement with Affin Hwang Asset Management Bhd to acquire its 5.74% stake, or 42.96 million shares, in Perdana, at RM1.55 per share or RM66.59 million in total.

The share purchase would raise Dayang’s shareholding in Perdana to 35.51% from 29.77%. Consequently, Dayang is obliged to launch a mandatory general offer to all shareholders in Perdana at RM1.55 per share. Dayang wants to have Perdana remain as a listed entity.

Perdana’s share price staged a rebound in mid-March, rising from RM1.01 to RM1.53 on Wednesday. It closed at RM1.52 yesterday.

The Edge Research’s fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.

This article first appeared in The Edge Financial Daily, on May 22, 2015.