PPT’s 1HFY13  net  profit  of  MYR47.7m  was  within  our  and  consensus estimates, at 48% and 47%  of the respective full-year forecasts. As the contract for its derrick lay barge will be terminated soon, we lower our FY13 earnings forecast by 11.0%, as there could be a three-month gap before it can be re-chartered. Despite the negative news, we retain our BUY call, as we remain positive on its asset expansion strategy.

- In line. PPT’s 1HFY13 net profit of MYR47.7m (+1.6% q-o-q, -22.8% y-o-y) was within our and consensus estimates, accounting for 47.7% and 47.4%  of  the  respective  full-year  forecasts.  On  a  y-o-y  comparison, profitability  was  weaker  due  to  lower  operating  margins  in  2Q13,  which were  attributed  to  the  recognition  of  cost  of  share  options  under  the employee share option (ESOS) and additional finance cost.

- Client  terminates  derrick  lay  barge  contract.  The  derrick  lay  barge, which  is  currently  chartered  to  TL  Offshore,  a  subsidiary  of SapuraKencana Petroleum (SAKP MK; BUY, FV: MYR4.96), contributes to PPT’s bottomline  by  some  MYR10m  per  quarter.  Given  that  this contract  will  be  terminated  before  end-3Q13,  we  lower  our  FY13 earnings  forecast  by  11%,  as  there  could  be  a  three-month  gap  before the barge could be re-chartered. 

- FY14  outlook  still  promising.  We believe that PPT’s FY14  earnings prospects remain intact following the recent acquisition of its new asset – a  floating  production,  storage  and  offloading  (FPSO)  vessel.  In  view  of the upcoming Pan Malaysia transportation & installation tender exercise, we  believe  that  there  should  be  sufficient  demand  for  its  derrick  lay barge, which will translate into a charter contract in FY14.

- Maintain  BUY.  We remain positive on PPT’s earnings prospects  given its asset expansion strategy to diversify its risk profile. While consensus will likely lower PPT’s FY13 earnings  forecast,  we  deem  any  weakness in share price an opportunity to accumulate the shares. We reiterate our BUY recommendation, with a higher MYR2.15 FV, pegged to 14x FY14 EPS.  Note  that  we  currently  value  the  offshore  asset  owners  Alam Maritim (AMRB MK; BUY, FV: MYR2.00) and Perdana Petroleum (PETR MK; NEUTRAL, FV: MYR1.80) at 14x P/E.

Source: RHB