PERISAI (0047) : Perisai Petroleum - In recovery mode
Target RM2.20 (Stock Rating: ADD)
Perisai reduced its core net loss to RM3m as at end-Sep 2014 as the company returned to profitability in 3Q14, thanks to early profits from PP101 that started work in mid-Aug. We deem the performance broadly in line as we expect a stronger earnings recovery in 4Q14 given the first full-quarter of contribution from PP101, mitigating the loss of income from the unemployment of Rubicone and E3. We continue to value the stock based on CY16 P/E of 14.8x with an unchanged 30% discount to the P/E of the oil & gas big caps. We maintain our Add recommendation, with the full deployment of the assets as the potential re-rating catalyst.
Contribution from PP101 trickles in
Perisai reversed to the black in 3Q14 as the deployment of jack-up Perisai Pacific 101 (PP101) in mid-Aug helped to soften the blow from the downtime of pipelay barge Enterprise 3 (E3) and mobile offshore production unit Rubicone since Oct 2013 after the completion of their respective contracts. Its 51%-owned floating production, storage and offloading (FPSO) vessel Perisai Kamelia, which started production in Nov 2013, chipped in as well. We expect a stronger earnings recovery in 4Q14, which will mark PP101's first full-quarter contribution. Perisai Kamelia will make its first full-year contribution this year.
PP101-led earnings recovery in 2H14
We expect Rubicone and E3 to be mobilised only in 2Q15 as management scouts for potential contracts in Southeast Asia. However, we draw comfort from the smooth commencement of PP101, Perisai's first jack-up, marking a new business and income stream for the company, and contributing to its turnaround in 2H14. The jack-up is servicing a 3-year US$158m Petronas Carigali contract, which translates into a daily charter rate (DCR) of US$144,292.
Jack-up fleet expansion in FY15-16
Management has started negotiations with potential clients for PP102, which is scheduled for delivery in Apr/May 2015. PP103 is expected to join the fleet in Jun 2016. Given the strong demand for jack-ups in Southeast Asia as reflected by UMW-OG's high utilisation rate, Perisai's management should be able to secure a contract for PP102 before the asset is completed. We expect it to secure a minimum DCR of US$140,000-150,000 for a long-term contract.
Source: CIMB Daybreak - 06 November 2014
Target RM2.20 (Stock Rating: ADD)
Perisai reduced its core net loss to RM3m as at end-Sep 2014 as the company returned to profitability in 3Q14, thanks to early profits from PP101 that started work in mid-Aug. We deem the performance broadly in line as we expect a stronger earnings recovery in 4Q14 given the first full-quarter of contribution from PP101, mitigating the loss of income from the unemployment of Rubicone and E3. We continue to value the stock based on CY16 P/E of 14.8x with an unchanged 30% discount to the P/E of the oil & gas big caps. We maintain our Add recommendation, with the full deployment of the assets as the potential re-rating catalyst.
Contribution from PP101 trickles in
Perisai reversed to the black in 3Q14 as the deployment of jack-up Perisai Pacific 101 (PP101) in mid-Aug helped to soften the blow from the downtime of pipelay barge Enterprise 3 (E3) and mobile offshore production unit Rubicone since Oct 2013 after the completion of their respective contracts. Its 51%-owned floating production, storage and offloading (FPSO) vessel Perisai Kamelia, which started production in Nov 2013, chipped in as well. We expect a stronger earnings recovery in 4Q14, which will mark PP101's first full-quarter contribution. Perisai Kamelia will make its first full-year contribution this year.
PP101-led earnings recovery in 2H14
We expect Rubicone and E3 to be mobilised only in 2Q15 as management scouts for potential contracts in Southeast Asia. However, we draw comfort from the smooth commencement of PP101, Perisai's first jack-up, marking a new business and income stream for the company, and contributing to its turnaround in 2H14. The jack-up is servicing a 3-year US$158m Petronas Carigali contract, which translates into a daily charter rate (DCR) of US$144,292.
Jack-up fleet expansion in FY15-16
Management has started negotiations with potential clients for PP102, which is scheduled for delivery in Apr/May 2015. PP103 is expected to join the fleet in Jun 2016. Given the strong demand for jack-ups in Southeast Asia as reflected by UMW-OG's high utilisation rate, Perisai's management should be able to secure a contract for PP102 before the asset is completed. We expect it to secure a minimum DCR of US$140,000-150,000 for a long-term contract.
Source: CIMB Daybreak - 06 November 2014
