News

• It was reported in the Financial Daily that Perisai Petroleum in a consortium led by Ezra may secure an FPSO charter for the North Malay Basin.
• According to the report Perisai may take an equity share in the FPSO vessel to fulfil localisation requirements.
• A consortium led by MISC is also bidding for the contract. The cost of the FPSO could range between US$300 to US$500m.

Comment

• We view a possible FPSO win positively in line with our view that Petronas’ localization and substitution policy will be of benefit to Perisai’s growth.
• In addition, a possible win reinforce our earlier view that its partnership with Emas (or Ezra grp) fortifies earnings.
• An FPSO would be consistent with Perisais strategy of finding lucrative assets backed buy long term charter contracts.
• We continue to like Perisai’s growth strategy to help Petronas execute its localization substitution policy and earnings clarity.

Risks

• Political risk, Execution risk.

Forecasts

• Maintained.

Rating

BUY

• Positives –
  • Clarity in earnings.
  • Clear and proven growth strategy and business model.
  • Growth is not dependent on securing O&G talent.
• Negatives –
  • Growth is dependent on domestic conditions

Valuation

• We maintain our TP of RM1.60 based on an unchanged 16x FY/13 EPS of 10 sen/share. We give a higher than average (of 14x) small cap O&G P/E because of Perisai’s earnings clarity and strong growth. Our valuation and forecasts does not include earnings from the US$208m jack up rig, which is expected to be delivered in mid-2014.

Source: Hong Leong Investment Bank Research - 8 Oct 2012