Last week, Perisai Petroleum Teknologi (“PERISAI”) announced
that it was proposing a 10% private placement exercise (85m shares). It also announced
that it was looking to purchase 51% stake in FPSO Lewek Arunothai and sell 50%
stake in SJR Marine (L) Ltd to EOC Ltd. We are not surprised by the private
placement given that the company will need to raise the funding for the jack-up
rigs. However, we are pleasantly surprised by the purchase of such a
significant stake in the FPSO and the 50% sale of SJR Marine. While the
near-term upside is minimal (given the FY13 EPS dilution) we believe that this
exercise will be long-term positive given the significant growth to earnings
from FY14 onwards. It is also a means for Perisai to acquire assets without having
to significantly raise financing. Post the exercise, Ezra’s shareholding is
estimated to be 27.5% (from 16% currently). We are keeping our estimates
unchanged until more details emerge from
Perisai and the proposals are completed. Maintain Outperform call and target
price of RM1.48 based on unchanged 13x target PER on CY13 EPS of 11.4sen.
10% private
placement. The exercise will raise
85.2m new shares and assuming a price of 99sen/share, cash proceeds of RM84.3m.
The bulk of the proceeds (86.2%) are partially expected for bank borrowing
repayments and/or the capital investment for the jack-up drilling rig. We
expect the net gearing ratio to taper off to 0.7x (from 0.9X currently). Recall
that Perisai has one jack-up rig currently under construction and the option to
construct another, which expires in Feb-13.
FPSO purchase and
sale of SJR Marine. Perisai also
announced that it had entered into a conditional share sale agreement with EOC
Ltd. for the purchase of 51%-stake in FPSO Lewek Arunothai and the sale of 50%
equity interest in SJR Marine. The purchase price for the FPSO is USD89.3m
(c.RM272m) and RM51, while the selling price for SJR Marine is USD37m
(c.RM112.7m). The exercise will be facilitated via a 144.7m rights issuance to
EOC Ltd, where the purchase price of the new rights will be on a net basis of
the two transactions. We believe this comes up to RM1.10/share. To recap,
Perisai is the agent for the FPSO, which
had been awarded a charter contract by Hess to operate in North Malay Basin; while
SJR Marine is the 100%-owned subsidiary that operates Perisai’s derrick-lay barge
(Enterprise 3) that is currently chartered to SapuraKencana for its operations.
This exercise will also see EOC gaining a 2-year option to purchase the
remaining 50% of SJR Marine.
Share base expands to
937m and 1081.6m. The private placement increases Perisai’s share base to
937m while the EOC exercise raises the share base further to 1081.6m.
Financial impact. The private placement could result in
interest savings of c.RM2.9m (based on 4.5% interest rate and a 25% tax rate).
Hence, we estimate that the FY13-14 net EPS dilution to be 6.4 and 6.8 sen.
Post the EOC Ltd. exercise, we estimate FY13 net profit to dip to RM93.7M
(versus RM97.3m currently) as there is only 6-month contribution for the FPSO.
However, FY14 net profit will increase to RM127.6m (from RM115m previously) as
the FPSO starts to contribute on a full year basis. The new shares thus could
result in FY13-14 EPS dilutions of 24.2% and 14.7% respectively. Our new CY13
fair value could thus fall to RM1.13 (versus RM1.48 currently), which implies a
2.2% upside to the exall Perisai’s share price of RM1.11. However, we believe
that investors will have to keep in sight the estimated 36.2% jump in earnings
for FY14.
Completion timeline.
The exercise will have to be tabled in an EGM to Perisai’s shareholders. The
completion of the entire exercise is targeted for Mar-July 2013.
Source: Kenanga
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