PPT’s 1QFY13 results were within our and consensus expectations. As part of an internal coverage revamp, we are revisiting our earnings model and raising our FY14 earnings forecast by 29.7% as we incorporate the potential earnings contribution from a FPSO vessel the company just acquired. Maintain BUY, with a higher FV of MYR1.68, pegged to 13x on the stock’s 12-month forward earnings.

¨      No surprises. Perisai Petroleum (PPT) registered revenue of MYR31.7m for 1QFY13, which was up by a marginal 0.5% y-o-y. Net profit rose by 1.2% y-o-y due to lower taxes as certain subsidiaries were only subjected to fixed tax rates under the Labuan Business Activity Act, 1990.

¨      Earnings better q-o-q. In 4QFY12, earnings dipped 1.6% q-o-q due to the cost of share options recognised under the employees share option scheme (ESOS), as reflected in its operating expenses and additional financing costs.

¨      Tweaking our earnings forecast. Following an internal coverage revamp, we are revising our earnings forecast and raising our FY14 earnings estimate by 29.7% as we incorporate the potential earnings contribution from a floating production, storage and offloading (FPSO) vessel, for which the acquisition will likely be completed sometime this year. Pending the completion of this purchase, however, we will refrain from including the potential earnings from this vessel in our FY13 earnings forecast until there is a firmer completion timeline. 

¨      Maintain BUY. We maintain our BUY recommendation on the stock, but with a higher revised FV of MYR1.68 vs MYR1.54 previously as we roll over our valuation to 12 months’ forward earnings. We are of the view that the stock faces downside risk should PPT fail to renew its mobile offshore production unit (MOPU), for which the renewal falls due later this year.

Source: RHB