November 8, 2011

Perisai's prospects look good despite Garuda delay

Stock Name: PERISAI
Company Name: PERISAI PETROLEUM TEKNOLOGI
Research House: CIMBPrice Call: BUYTarget Price: 1.45



Perisai Petroleum Teknologi Bhd
(Nov 8, 62.5 sen)
Recommend outperform at 63 sen with revised target price of RM1.45 (from RM1.60): We learned from our recent meeting with managing director Izzet Ishak that the Garuda Energy (L) Ltd deal is now expected to be concluded in December, three months later than expected, because the conversion of Garuda's mobile offshore production unit (MOPU) took longer than expected. We therefore lower our FY11 EPS by 26% as we remove the RM12.5 million net profit imputed in our numbers. However, we take comfort in the fact that the MOPU has started servicing its 2+1+1 contract at the Bekok C field. Contributions should start flowing into Perisai's books in 1Q12.

The delay results in an earnings per share (EPS) downgrade for FY11 only. Our target price also drops as we roll it forward and use our CY13 target market price-earnings ratio of 12.6 times instead of our CY12 PER of 14.5 times. Fleet expansion and potential marginal field jobs support our 'outperform' call.

We are pumped about Perisai's prospects. Contributions from Garuda may come through later than expected but Perisai has started to reap the benefits of last year's restructuring. In August, the company completed the RM45 million acquisition of a 51% stake in Intan Offshore Sdn Bhd. The Intan and Garuda acquisitions underpin our expectations of record net profits in FY12 and FY13 and a robust three-year EPS compound annual growth rate (CAGR) of 112%. The 209% EPS surge in FY11 will be Perisai's first earnings growth in four years.

We advise investors to accumulate this undervalued stock aggressively. Its EPS CAGR is hard to beat and the stock offers the most share price upside in our oil and gas portfolio. Despite this, FY12/FY13 times PERs are under six times, making Perisai the cheapest stock in the portfolio. Potential marginal field contracts, which may require MOPUs, add to the attraction. ' CIMB Research, Nov 8


This article appeared in The Edge Financial Daily, November 9, 2011.

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