UpstreamOnline  reported  last  Friday  that  Petronas  has  issued  bid documents  for  two  principal  facilities  –  a  mobile  offshore  production unit  (MOPU)  and  a  floating  storage  and  offloading  vessel  –  for  the development of shallow-water fields in Blocks 102 and 106 off Northern Vietnam. The article  highlighted  that Perisai (PPT) could be a potential bidder, which if true is positive for the company. Maintain BUY. 

- Three  additional  years  of  earnings  visibility.  The  two  principal facilities, which  will be leased and form an early production system,  are designed  to  gather  as  much  reservoir  data  as  possible  before  a commitment  to  a  potentially  larger  scheme.  We  understand  that  the contracts being offered will likely begin in end-2014 with a fixed period of three years  plus two optional years, offering  short-term  earnings visibility for PPT. 

- PPT  not  the  only  bidder.  The  newspaper  article  also  quoted SapuraKencana  Petroleum  and  a  consortium  making  up  of  Petrofac,PetroVietnam  Technical  Services  Corporation  with  Vietsovpetro  as potential competitors. Despite the competition, we believe PPT stands  a good chance of securing the contracts  as it has experience with MOPUs. The MOPU will likely be available by end-2014, assuming PPT’s existing client  re-charters  the  MOPU  for  an  additional  year  from  Sept  2013  to Sept 2014.

- Retaining  our  forecast.  Our  earnings  assumptions   are   premised  on PPT  bagging  the  re-chartering  contracts  for  its  derrick  lay  barge Enterprise 3 and its mobile offshore production unit (MOPU) for the rest of FY13 and FY14. We have yet to include the potential earnings from its floating production, storage and offloading (FPSO) vessel in FY13 as the purchase  of  the  vessel  has  yet  to  be  completed,  which  should  provide more upside to our FY13 estimates.

- Maintain BUY.  We remain positive on PPT’s  earnings  prospects  riding on  its asset  expansion strategy  to  diversify  its  risk  profile. We  reiterate our BUY recommendation,  with an unchanged MYR1.81  TP,  pegged to 14x its 12-months forward earnings.

Source: RHB