Overview
Perisai Petroleum Teknologi Berhad is an upstream oil and gas service provider. The Company's assets provide support in the offshore production facilities, offshore drilling, offshore support vessels and offshore construction and installation segments.
Review
Perisai Petroleum Teknologi (PPT)’s FY13 net profit of MYR71.8m made up only 93%/91% of our/consensus estimates. The poor performance was attributed to the non-extension of contracts for Rubicone and Enterprise 3 (E3). We upgrade the stock to BUY, with a new FV of MYR2.28 (from MYR1.62), based on a target FY14 P/E of 20x (from 18x), which is still a discount to UMW Oil & Gas’ 30x.
- FY13 results below expectation. PPT’s full-year FY13 net profit of MYR71.8m made up only 93% and 91% of our and consensus’ estimates. The poor performance was attributed to the non-extension of contracts for its mobile offshore production unit (MOPU), Rubicone in 2QFY13 and its derrick lay barge, Enterprise 3 (E3) in 3QFY13. As a result, FY13 revenue and net profit declined 13% and 22% y-o-y respectively.
- 4QFY13 took the brunt. We had expected 4QFY13 to be a bad quarter mainly because Rubicone and E3 effectively stopped contributing after 3QFY13 and 4QFY13 respectively. These vessels previously accounted for around 40% of its earnings. However, we do not expect these vessels to remain idle throughout FY14 and conservatively assume a 50% utilisation rate for each vessel in FY14.
- Time to move on after a bad FY13. We believe PPT’s FY13 performance is just a temporary blip to its otherwise decent financial performance. The group’s estimated FY14/15 earnings growth of 31%/79% will be driven by its new business unit – the drilling segment. We reaffirm our stance that PPT will be able to secure charter contracts in both domestic and international water s, considering demand for new rigs to replace older ones is still strong.
- Upgrade to BUY from Neutral; new MYR2.28 FV. We upgrade the stock to BUY (from Neutral) with a higher MYR2.28 FV (from MYR1.62),based on a higher target FY14 P/E of 20x (from18x), but still at a discount to UMW Oil & Gas (UMWOG MK, NR)’s current FY14 P/E of 30x. The group’s estimated FY14/15 earnings are expected to grow by 31%/79% respectively, driven by its new income stream from the drilling segment. We keep our FY14/15 forecasts unchanged, as our numbers have already reflected contributions from PPT’s first two rigs, slated to be delivered by 2QFY14 and 3QFY15.
