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Perisai Petroleum’s Prospects Promising
Malaysia Perspective | 20 May 2013

By Cecilia Kong

Most listed companies, Perisai Petroleum included, have announced their respective results for the first quarter of fiscal year 2013. Although brokers felt that Perisai Petroleum’s performance in the first quarter bears no surprises, with the impending listing of UMW’s oil and gas business set to drive up the profit outlook for the industry, coupled with expected future profits from Perisai Petroleum’s recent assets acquisition, brokers are feeling optimistic about the prospects for Perisai Petroleum.

Broker Maybank Investment Bank believes Perisai Petroleum’s first quarter results, which accounted for 24% of the full-year forecast, were in line with earlier estimates. As a result, Maybank Investment is maintaining its earnings forecast for Perisai Petroleum for now.

Brokerage RHB Bank also believes that Perisai Petroleum’s results were in line with earlier estimates. However, after factoring in its potential future profit, RHB Bank has decided to raise Perisai Petroleum’s profit for FY2013 to 29.7%. It is maintaining it’s “buy” investment rating while raising its reasonable price to RM 1.68.

Maybank Investment Bank pointed out that UMW’s oil and gas business will be listed in the second half of this year, at which time Perisai Petroleum, which has a similar business nature, will see its business driven up in tandem and its investment rating reviewed. Maybank Investment Bank has set Perisai’s target price in FY2013 at 11 times of its earnings per share.

In terms of its business performance, Maybank Investment Bank explained that Perisai Petroleum’s Q1 net profit grew year-on-year by 2%, mainly due to “its subsidiary Intan Offshore, in which Perisai holds a 51% equity interest, saw a rise in contribution from its marine business, because this subsidiary has benefitted from lower taxes (86% year-on-year drop).”

According to records, Intan Offshore moved into Perisai’s office in Labuan in Q3 2012, where it benefitted from its preferential tax status under the Labuan Business Law (1990). Its tax expenditure was thus slashed by 86% year-on-year .

Perisai’s mobile offshore production units (MOPU) business accounts for 46% of its total net profit, while its pipelaying ship chartering business (100% managed by Enterprise 3) and its eight offshore support vessels (OSV) managed by Intan Offshore account respectively for 43% and 11% of the group’s total net profit.

Maybank Investment Bank said, “Perisai Petroleum is expected to be awarded a jack-up rig engineering contract in the second half of the year, while the company’s Pacific 101 jack-up rig will also be delivered by the end of July 2014.”

“The floating production, storage and off-loading (FPSO) vessel, of which Perisai owns 51% equity interest, will be put into operation in this July, and will dovetail nicely with E3′s ship sale transaction. We also expect that Perisai will receive a 1 year contract extension for the chartering of its MOPU before it is due on September 30, 2013.”

Maybank Investment Bank predicts that Perisai Petroleum’s jack-up rig and FPSO businesses will contribute to a further 19% and 27% growth in its earnings ratio for FY2014 and FY2015 respectively. Its profit by FY2015 is expected to rise further, because by then, Perisai Petroleum will be awarded a second jack-up rig contract (delivery date set to be Q2 2015).

However, RHB Bank cautioned that, should Perisai’s MOPU contract extension deal fail to materialise, the group will risk a shedding of its share prices.

Source: Maybank Investment Bank

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