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Friday May 15, 2009

Report: Dispute with Petronas to have little impact on Perwaja


PETALING JAYA: Perwaja Holdings Bhd’s dispute with Petroliam Nasional Bhd (Petronas) over the natural gas price computation will have little impact on the company’s profit and loss account.

OSK Research in its report said the dispute, however, might have an impact on its cash flow as well as investor sentiment should Perwaja’s appeal to the Government not go through.

“We think this type of news has never been good for investor sentiment, and thus expect some selling pressure based on this development,” it said.

Perwaja had on Tuesday received a writ of summons and a statement of claim from Petronas for the sum of RM85.8mil, together with a claim of interest with reference to the total amount invoiced for the supply of gas by Petronas to the company.

Assuming that the appeal did not go through, Perwaja might need to make full payment on the outstanding owed to Petronas within the stipulated time frame, said OSK, noting that it was unable to accurately assess the probability of Perwaja in winning the appeal.

Perwaja’s management had earlier said the company had made full provision for the difference between Perwaja’s price and Petronas’ price for the financial year ended Dec 31 last year.

Meanwhile, OSK has tweaked Perwaja’s earnings projection after making a few major changes in its key assumption that it will only disclose later.

“We expect the company to make a loss of RM41.9mil in the financial year ending Dec 31, 2009 compared with the previous estimate of a RM77.9mil profit,” the research house said.

“Together with the negative news flow, we downgrade Perwaja from ‘neutral’ to ‘sell’,” it said.


PERWAJA : [Stock Watch] [News]


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