PERISAI (0047) - Perisai Petroleum - Sell the rally
Target RM0.63 (Stock Rating: REDUCE)
We maintain our forecasts and target price but downgrade our call for Perisai from Add to Reduce on the back of a strong share price outperformance YTD. Furthermore, we do not anticipate any exciting catalysts, at least until mid-year, as management scouts for contracts for three assets – Rubicone, E3 and PP102. We continue to value the stock at 10.5x CY16 P/E, still at a 30% discount to the oil & gas big caps. A potential de-rating catalyst is a prolonged contract search for the three assets. We recommend a switch to our top oil & gas small-cap pick Perdana.
What Happened
Perisai’s share price has rebounded sharply as the stock rallies from being the worst performer under our oil & gas coverage in 2014 (Figure 1) to the best performer so far in 2015. The share price has surged by a blistering 52% and outpaced the KLCI by 49% YTD (Figure 2) as oil price continues to recover. The share price has exceeded our target price and yet there are no exciting catalysts for the company, at least until mid-year, as management looks for potential clients for three assets, namely mobile offshore production unit (MOPU) Rubicone, pipelay barge Enterprise 3 (E3) and jack-up PP102. Rubicone and E3 have been unemployed since 1 Oct 2013 after the completion of their respective contracts. PP102 is slated for delivery in Apr/May this year.
What We Think
We understand that Rubicone has been earmarked for work at the PM9 gas field in offshore Terengganu. The MOPU is suitable for the job because it has gas facilities. Also, currently docked at MMHE’s Pasir Gudang yard, the MOPU is ready for deployment. However, a decision on the operatorship of PM9 has been delayed for more than a year and we understand that the earliest a decision will be made is in mid-2015. In the meantime, the upkeep of Rubicone and E3 costs Perisai around RM3.1m per month (RM2m for Rubicone and RM1.1m for E3). E3 is currently docked at Johor Port. We removed Rubicone and E3 from our forecasts in Dec 2014. Our forecasts include only these assets: jack-ups PP101 and PP102, FPSO vessel Perisai Kamelia and various offshore support vessels under Intan. Adding back Rubicone and E3 into our forecasts in 2H15 would boost our EPS by 81% for FY15 and 84% for FY16.
What You Should Do
For exposure to oil & gas small caps, we advise investors to switch to Perdana.
Source: CIMB Daybreak - 18 February 2015
Target RM0.63 (Stock Rating: REDUCE)
We maintain our forecasts and target price but downgrade our call for Perisai from Add to Reduce on the back of a strong share price outperformance YTD. Furthermore, we do not anticipate any exciting catalysts, at least until mid-year, as management scouts for contracts for three assets – Rubicone, E3 and PP102. We continue to value the stock at 10.5x CY16 P/E, still at a 30% discount to the oil & gas big caps. A potential de-rating catalyst is a prolonged contract search for the three assets. We recommend a switch to our top oil & gas small-cap pick Perdana.
What Happened
Perisai’s share price has rebounded sharply as the stock rallies from being the worst performer under our oil & gas coverage in 2014 (Figure 1) to the best performer so far in 2015. The share price has surged by a blistering 52% and outpaced the KLCI by 49% YTD (Figure 2) as oil price continues to recover. The share price has exceeded our target price and yet there are no exciting catalysts for the company, at least until mid-year, as management looks for potential clients for three assets, namely mobile offshore production unit (MOPU) Rubicone, pipelay barge Enterprise 3 (E3) and jack-up PP102. Rubicone and E3 have been unemployed since 1 Oct 2013 after the completion of their respective contracts. PP102 is slated for delivery in Apr/May this year.
What We Think
We understand that Rubicone has been earmarked for work at the PM9 gas field in offshore Terengganu. The MOPU is suitable for the job because it has gas facilities. Also, currently docked at MMHE’s Pasir Gudang yard, the MOPU is ready for deployment. However, a decision on the operatorship of PM9 has been delayed for more than a year and we understand that the earliest a decision will be made is in mid-2015. In the meantime, the upkeep of Rubicone and E3 costs Perisai around RM3.1m per month (RM2m for Rubicone and RM1.1m for E3). E3 is currently docked at Johor Port. We removed Rubicone and E3 from our forecasts in Dec 2014. Our forecasts include only these assets: jack-ups PP101 and PP102, FPSO vessel Perisai Kamelia and various offshore support vessels under Intan. Adding back Rubicone and E3 into our forecasts in 2H15 would boost our EPS by 81% for FY15 and 84% for FY16.
What You Should Do
For exposure to oil & gas small caps, we advise investors to switch to Perdana.
Source: CIMB Daybreak - 18 February 2015
