Period  3Q13 /9M13

Actual vs. Expectations  Perisai Petroleum Teknologi (PERISAI) reported 3Q13 core net profit of RM23.4m which brought its 9M13 net profit to RM71.2m. This is within our expectations; accounting for 93.9% of our full-year earnings (RM75.8m); but slightly below market’s forecasts accounting for 87.5% of consensus full-year earnings (RM87.5m).

 We have restated PERISAI’s earnings to exclude the discontinued items. Its derrick-lay barge E3 has been presented as discontinued operations in accordance with an eventual sale in 2-3 years time.

 Although its 9M13 earnings are already more than 90% of our full-year numbers, we believe that it is still within our expectations as we expect a significantly challenging 4Q13 with both the E3 and MOPU being uncharted.

Dividends  No dividend was declared in this quarter as expected.

Key Results Highlights  3Q13 earnings did not post any surprises as operations were unchanged.

 QoQ, the 3Q13 net profit only saw a minimal sequential difference from 2Q13 (RM24.1m) due to similar level of operations.

 YoY, net profit grew by 13% (from RM20.7m) mainly due to better operating income.

Outlook  4Q13 will see both the E3 and MOPU Rubicone uncharted.

 According to management, E3 is tendering for the Pan Malaysia T&I job and other prospects; whilst the MOPU Rubicone is also looking for projects on both local and domestic shores.

 In terms of timeline, the E3 could possibly see a contract within the year (assuming it gets the Pan Malaysian T&I job); whilst any MOPU contract would likely be next year.

 The FPSO is likely to see some contributions in 4Q13.

 PERISAI is set to receive two jack-up rigs (in mid-14 and mid-15) which we believe should be able to secure contracts given that there are at least 17 rig contracts that are expiring from mid-2013 to 2015.

Change to Forecasts  We maintain our numbers for now, given the lack of income generating assets in 4Q13.

Rating  Maintain MARKET PERFORM

Valuation  We maintain our TP of RM1.42 based on an unchanged CY14 PER of 14x.

 Our CY14 PER is based on a 10% discount to the 0.5 SD level of 15.6x of PERISAI’s historical trading range. The discount is due to contract uncertainties related to the E3 and MOPU.

Risks to Our Call     Contracts for E3 and MOPU Rubicone coming in faster than anticipated.

Source: Kenanga