News  Last week, PERISAI announced that its subsidiary, Intan Offshore (51% owned) had entered into a Memorandum of Agreement (MOA) with Lewek Robin Shipping Pte Ltd (LRSPL) to acquire an AHTS named Lewek Robin, which is capable of a bollard pull of 61 tonnes and handling 80 tonne anchors. In addition, it is also equipped with fire fighting facilities.

 The purchase price for the AHTS is USD7m (RM22.8m) with external borrowings amounting to USD4.6m (RM14.9m).  

Comments  Management guided that the vessel will be on a bare-boat charter basis to Ezra at a daily charter rate (DCR) of USD2.6k for the next seven years. This translates to an additional USD949k (RM3.0m) per annum. At a 40% margin, this yields a net profit of RM1.2m per annum going forward. However, we wish to highlight that the net impact to Perisai is only 51% based on its shareholdings.

 Outlook  Its assets, the E3 and MOPU Rubicone are still idle to-date and PERISAI is currently bidding for both domestic and international projects with guidance for contract wins over the next 3-6 months.

  PERISAI is also bidding for jack-up rig contracts ahead of its 1st jack-up rig delivery in May-14. Preference is to keep the rig in local-shores. Given the buoyant jack-up rig demand, we foresee no issues for a contract win given that there are at least 17 rig contracts that are expiring from mid-2013 to 2015.

Forecast  Given the immaterial impact of the new AHTS to Perisai, we make no changes to our earnings estimates for FY14E-15E.

Rating Maintain OUTPERFORM  

Valuation  We maintain our TP of RM2.53 based on 16x CY15 EPS.

Post the upcoming private placement, we will adjust our TP based on the price set later.

 The 16x PER is approximately at a 19%-discount to its 5-year+1.5 standard deviation (above its Forward PER mean) of 19.5x which we believe is justified given the uncertainties with regards to job bids in its MOPU division.

Risks to Our Call  (i) Lower margins on assets; and (ii) Slower-than-expected job wins for assets. 

Source: Kenanga