Tuesday, 14 February 2012

Perisai Petroleum: No spills and plenty of thrills

Perisai Petroleum Teknologi Bhd (Feb 13, 86.5 sen)
Maintain outperform with target price RM1.45: We continue to value Perisai at our 2013 target market price-earnings ratio (PER) of 12.6 times. A potentially strong 4Q11 performance, fleet expansion and a prospective marginal field venture support our “outperform” call. We have not factored in any contribution from marginal fields.

We do not expect Perisai to disappoint when it releases its 4QFY11 results on Feb 22. The company is likely to post a net profit of RM10 to RM12 million or growth of around 55% year-on-year (y-o-y) and 20% quarter-on-quarter (q-o-q).

The strong 4QFY11 is due to the first full-quarter contribution from Intan Offshore Sdn Bhd, which owns eight vessels. Perisai completed the RM45 million acquisition of a 51% stake in Intan in August 2011.

The 4QFY11 performance will also reflect the contribution from pipelay barge Enterprise 3.

Net profit for 4QFY11 is expected to give Perisai a record finish in FY11 with a core net profit of RM35 million. FY11’s 209% core earnings per share (EPS) jump will mark Perisai’s first earnings expansion since FY07.

We remain bullish on Perisai’s prospects. Garuda Energy (L) Inc’s mobile offshore production unit (MOPU) has been contributing to Perisai’s bottom line since Jan 4 when the acquisition was finalised.

The MOPU, which is servicing Petronas’ 2+1+1 contract at the Bekok C field, comes with an annual profit guarantee of RM50 million for the primary term.

The Intan and Garuda purchases underpin our expectations of new net profit highs in FY12/FY13 and a three-year EPS compound annual growth rate of 96%.

We advise investors to accumulate the stock aggressively. It offers the most share price upside in our oil and gas portfolio.

Despite this, FY12/FY13 PERs are under eight times, making Perisai the cheapest stock in the portfolio. Potential marginal field contracts, which may require MOPUs, add to the attraction. — CIMB IB Research, Feb 13

This article appeared in The Edge Financial Daily, February 14, 2012.

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