Perisai oh Perisai

Perisai Petroleum — Steady as she goes
Business & Markets 2013
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Friday, 08 February 2013 09:40

(Feb 7, 96 sen)

Maintain buy at 96.5 sen with a target price of RM1.40: We do not anticipate any surprises in Perisai’s results for the fourth quarter of the financial year ended Dec 31, 2012 (4QFY12) due yesterday.
Our forecasts, which imply an FY13 to FY15 net profit compound annual growth rate of 24%, are unchanged. Perisai’s 51% owned floating, production, storage and offloading (FPSO) vessel will fuel growth in FY13, though this will be offset by income losses from the Enterprise 3 (E3) pipe lay barge as it halved its equity stake in SJR Marine (L) Ltd to 50%. The recent price weakness is an opportunity to accumulate a stock with good earnings visibility and undemanding valuations.
We expect Perisai to register a net profit of RM23 million in 4QFY12 (+7% quarter-on-quarter; -28% year-on-year [y-o-y]), bringing its full-year net earnings to RM91 million, within our and consensus’ RM91 million to RM90 million forecasts. We expect the mobile offshore production unit charter to have anchored Perisai’s earnings in 4Q, making up 60% of group’s earnings, followed by the E3 charter (21%) and eight offshore support vessels (19%), the latter under 51%-owned Intan Offshore Sdn Bhd. We do not expect any dividend payout for the quarter or FY12 as a whole.
Perisai is expected to enter into talks with TL Offshore Sdn Bhd soon to extend the E3 charter beyond June 2013. We believe the likelihood of Perisai securing an extension is high, in view of increasing offshore oil and gas activities this year. We also expect Perisai to exercise its option to secure a second jack-up rig from PPL Shipyard Pte Ltd by this month for US$210 million (RM649 million). Related to this, we expect Perisai to secure new drilling rig charter contract(s) in the second half of FY13.
Perisai will likely recognise about RM48 million in net profit in FY13 from its 51% stake in FPSO Arunothai. The incremental earnings will be offset by an estimated RM20 million in earnings losses from the E3 charter, following its disposal of a 50% stake in SJR Marine (which owns E3). In all, we expect Perisai’s net profit to grow by 17% y-o-y to RM107 million in FY13. Earnings per share growth will marginal, at 3% y-o-y to 11.1sen, owing to the 13% increase in share base, from 852 million to 967 million. — Maybank IB Research, Feb 7

This article first appeared in The Edge Financial Daily, on February 8, 2013.