Stock Name: PERISAI
Company Name: PERISAI PETROLEUM TEKNOLOGI
Research House: RHB
KUALA LUMPUR: RHB Research has cleared the air over its recent report on PERISAI PETROLEUM TEKNOLOGI [] Bhd and views the proposed acquisition of Garuda Energy (L) Ltd from a former founder, Nagendran Nadarajah for US$70 million (RM212 million) as a good deal for the company.
To recap, Perisai proposed the acquisition of Garuda Energy (L) Ltd from Nagendran for US$70 million (RM212 million) to be satisfied by way of US$50 million cash and the issuance of new Perisai shares at an issue price of 65 sen per share. Based on Perisai's estimated enlarged capital, Nagendran would own about 12% of Perisai should the deal go through.
Garuda Energy owns a jack-up rig, namely Rubicone, which is being converted into a mobile offshore production unit (MOPU) and the makeover works are expected to be completed by May.
Garuda Energy is poised to enter into a bareboat charter agreement with Gryphon Energy (M) Sdn Bhd (GEM), which has in turn been awarded a contract by a major oil and gas player to lease, operate and maintain a MOPU for'' two years with extension for another two years. A bareboat charter arrangement of the MOPU with GEM is expected to generate a revenue of about US$25 million per annum.
RHB Research said on Thursday, March 31 that after meeting with management on Wednesday, it realised that all its concerns as highlighted in its RHB Equity 360 report were factually inaccurate and the report has been withdrawn.
'In fact, the proposal appears to be a good deal for Perisai, given the availability of the asset coincides with the long-term charter contract which is expected to be net cashflow positive to Perisai,' it said.
The research house said'' Perisai will only pay the balance of US$66m purchase price (nett of the US$4 million deposit) upon delivery of the MOPU to the charter client as per the specifications of the client and Perisai.
'Therefore, we believe there is no corporate governance issue with the proposal, which has been negotiated to the benefit of Perisai shareholders, and is still subject to a due diligence exercise.
'In our view, despite net gearing of 0.7x end-2010, Perisai should have no problem raising funding for the RM150m cash portion of the purchase price given the ready long-term contract,' it said.
RHB Research said its back-of-the-envelope calculation suggests net profit contribution from the charter to be around RM40-50m, versus'' the FY10 reported net profit of RM10.3m and FY11 consensus net profit of RM30 million (which excludes the Intan acquisition as well as this proposal).
'As this proposal is only expected to be completed in the 4Q11, the full-year impact would be in FY12, lifting the current consensus FY12 net profit estimate to around RM70 million to RM80 million. Assuming 846 million enlarged share capital, this suggests an FY12 EPS of 8.3-9.5 sen or a PER of 10.6x. Tentatively assuming a target PER of 15x, i.e. in line with our target for the market, this implies a fair value estimate of RM1.25-1.43/share,' it said.
Company Name: PERISAI PETROLEUM TEKNOLOGI
Research House: RHB
KUALA LUMPUR: RHB Research has cleared the air over its recent report on PERISAI PETROLEUM TEKNOLOGI [] Bhd and views the proposed acquisition of Garuda Energy (L) Ltd from a former founder, Nagendran Nadarajah for US$70 million (RM212 million) as a good deal for the company.
To recap, Perisai proposed the acquisition of Garuda Energy (L) Ltd from Nagendran for US$70 million (RM212 million) to be satisfied by way of US$50 million cash and the issuance of new Perisai shares at an issue price of 65 sen per share. Based on Perisai's estimated enlarged capital, Nagendran would own about 12% of Perisai should the deal go through.
Garuda Energy owns a jack-up rig, namely Rubicone, which is being converted into a mobile offshore production unit (MOPU) and the makeover works are expected to be completed by May.
Garuda Energy is poised to enter into a bareboat charter agreement with Gryphon Energy (M) Sdn Bhd (GEM), which has in turn been awarded a contract by a major oil and gas player to lease, operate and maintain a MOPU for'' two years with extension for another two years. A bareboat charter arrangement of the MOPU with GEM is expected to generate a revenue of about US$25 million per annum.
RHB Research said on Thursday, March 31 that after meeting with management on Wednesday, it realised that all its concerns as highlighted in its RHB Equity 360 report were factually inaccurate and the report has been withdrawn.
'In fact, the proposal appears to be a good deal for Perisai, given the availability of the asset coincides with the long-term charter contract which is expected to be net cashflow positive to Perisai,' it said.
The research house said'' Perisai will only pay the balance of US$66m purchase price (nett of the US$4 million deposit) upon delivery of the MOPU to the charter client as per the specifications of the client and Perisai.
'Therefore, we believe there is no corporate governance issue with the proposal, which has been negotiated to the benefit of Perisai shareholders, and is still subject to a due diligence exercise.
'In our view, despite net gearing of 0.7x end-2010, Perisai should have no problem raising funding for the RM150m cash portion of the purchase price given the ready long-term contract,' it said.
RHB Research said its back-of-the-envelope calculation suggests net profit contribution from the charter to be around RM40-50m, versus'' the FY10 reported net profit of RM10.3m and FY11 consensus net profit of RM30 million (which excludes the Intan acquisition as well as this proposal).
'As this proposal is only expected to be completed in the 4Q11, the full-year impact would be in FY12, lifting the current consensus FY12 net profit estimate to around RM70 million to RM80 million. Assuming 846 million enlarged share capital, this suggests an FY12 EPS of 8.3-9.5 sen or a PER of 10.6x. Tentatively assuming a target PER of 15x, i.e. in line with our target for the market, this implies a fair value estimate of RM1.25-1.43/share,' it said.
With 2 prominant major shareholders and a MD who used to helm the highly successful SapuraCrest, the company's outlook is indeed interestst. Watch for its share price movement.
ReplyDeleteMarch 9, 2011 8:07 AM
Anonymous said...
Agreed as the MD was granted by the major shareholder Ezra an option to buy 1/2 of the latter's stake within 2 years at Ezra's entry cost. There must be the possibilities that MD is extremely capable to bring the company to much greater heights to secure such a carrot.
March 9, 2011 10:42 PM
Anonymous said...
I won't be surprised if the share price can climb above RM1.00 given that it should be well supported by Ezra Holdings which is regional giant in the industry. We should look at the share price appreciation of Ezra from its own IPO price until today. This can be easily found in Ezra website. :-)
March 11, 2011 1:25 PM
Anonymous said...
Hahaha Even a US giant fund Legg Mason, Inc has bought a 5% stake in this company on March 23, 2011. Its outlook must be bright, right.....? Let's see :-)
March 28, 2011 6:56 PM
We can derive great comfort from the fact that Perisai has a respectable corporate shareholder namely Ezra Holdings Limited. Hence, there shall not be any corporate governance issues premised on its proven track record.
ReplyDeleteMoreover, Legg Mason Inc must have done in-depth research and analysis before acquiring its 5% stake recently.
Cheers and let's see Ezra and the MD bring Perisai to greater heights!
Won't be surprised to see Perisai doing very well in the next 2 years given the company is now backed by the respectable EZRA, Legg Mason Inc, and Zainola Izzet who is the former MD of Sapura Crest.
ReplyDeleteTime will surely tell....
For those who need to see the share price movement chart for SapuraCrest for the last 5 years, kindly go the link below herein:-
ReplyDeletehttp://www.shareinvestor.com.my/charts.pl?action=charts_history
Or here:
ReplyDeleteSapuraCrest: http://klse.i3investor.com/servlets/stk/8575.jsp
Perisai: http://klse.i3investor.com/servlets/stk/0047.jsp