Friday, 1 March 2013

Perisai Petroleum Teknologi - Second jack-up rig ordered

News  Yesterday, PERISAI announced that it had exercised the option from PPL Shipyard Pte Ltd to construct an additional rig of similar specification to its first jack-up rig, Perisai Pacific 101 at a price of USD210m (c. RM648.9m).

 The contract price is payable in two portions with the initial 20% payable upfront and the balance 80% upon delivery (expected to be by 2Q15).

Comments  We are not surprised by the announcement as the recent private placement (that raised RM84.3m) was initiated to raise funds for the purchase of the second rig. As such, we expect a neutral response to this announcement by the market.

 Our focus will remain on the impending asset swap (50% of SJR Marine for 51% of FPSO Lewek Arunothai) that is targeted for completion by mid-2013-3QFY13.

Outlook  The asset swap expected in mid-2013 above will expand Perisai’s service offering to the production leg of the oil and gas value chain and boast its long term earnings.

 The first jack-up rig (expected by July-2014) will be the first kicker to earnings, with further growth by mid-2015 for Perisai’s due to the incoming second rig.

 The company’s strategy is to focus on its drilling and production segments.

Forecast  No change to our earnings estimates given that the earnings accretion from the new rig will only be in 2015.

Rating   Maintain OUTPERFORM

Valuation  Our unchanged target price of RM1.39 is based on a 13x PER target on CY13 EPS.

Risks  1) A downturn in the oil and gas sector that will delay contract flows; 2) failure to replenish contracts, which will significantly affect its earnings growth; and 3) failure to achieve the expected margins on its projects.

Source: Kenanga

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