Period    4Q12 / 12M12

Actual vs. Expectations   The FY12 net profit of RM92.2m was within our expectations, making up 99% and 98% of ours (RM93.2m) and the consensus' (RM93.6m) net profit estimates. 

 Perisai has presented 50% of its E3's earnings as discontinued operations in accordance to its eventual sale once the FPSO earnings (JV with Ezra) come into play. However, we have opted to consolidate the figures until the asset-swap actually materialises. 

Dividends   No dividend was declared.

Key Results Highlights    QoQ, the 4Q12 net profit (RM24.1m) was up 12.3% despite the PBT being down by 40.2% to RM15.3m (from RM25.5m) mainly due to a tax write-back on the eventual transfer of Perisai's 51%-owned vessels under Intan Offshore. The PBT was down mainly due to impairments made of c.RM24.9m for: 1) an investment in an associate; and 2) cold-stacked workboats that were still on Perisai's balance sheet. We understand from management that the associate and the vessels are legacy issues and hence, the impairments should be non-recurring.  

 YoY, the significant jump in both the revenue (+41.8%) and pretax profit (+121.1%) was mainly due to new earnings from the Offshore Support Vessel (OSVs) business under 51%-owned Intan Offshore, and the Rubicone (Mobile Offshore Production Unit, "MOPU"). 

Outlook   The asset swap expected in mid-2013; (51% FPSO for 50% of SJR Marine) will expand Perisai's service offering to the production leg of the oil and gas value chain and boast its long-term earnings.

 Further growth by mid-2015 to Perisai's earnings is likely, assuming its option for a second rig is exercised soon.

 The company's strategy is to focus on the drilling and production segments.

Change to Forecasts    No changes to our forecasts at this juncture. 

Rating     Maintain OUTPERFORM 

Valuation    Our target price of RM1.39 is based on a targeted PER of 13.0x (in line with its 5-year historical forward PER of 13.3x) on the CY13 EPS of 10.7 sen. 

Risks   1) a downturn in the oil and gas sector that will delay contract flows; 2) failure to replenish contracts, which will significantly affect its earnings growth; and 3) the failure to raise funding for asset expansion purposes.  

Source: Kenanga