The  coming  expiry  of  PPT’s mobile offshore production unit (MOPU) bareboat charter is likely seen as a negative, given market expectations of  an  extension.  Thus,  we  slash  our  FY13F/14F  EPS  estimates  by  25-27%,  factoring  in  a  9-month  downtime  for  the  MOPU  and  the  dilution from  PPT’s  new  shares  issuance.  Maintain  BUY  with  a  lower  MYR1.56 TP (from MYR2.15), implying an 18% upside from its last closing price.

- OPU  charter  expiry  likely  seen  as  negative.  Perisai  recently announced  that the charter  for  its  MOPU  will  expire  by  end-September. To  recap,  the  MOPU  was  on  a  2-year  bareboat  charter  to  Gryphon Energy at USD25m (MYR79m) per annum. The unit was acquired for a total cost of MYR212m.

- Slashing EPS estimates by 25-27%. Following the expiry of the charter contract,  we  cut  our  FY13F/14F  net  profit  estimates  on  PPT  by MYR12m/MYR22m,  as  we  now  expect  a  9-month  downtime  for  the MOPU.  Additionally,  we  believe  that  the  asset  may  need  to  undergo refurbishment  to  enhance  its  marketability  for  new  charters.  We  have also  factored  in  the  dilution  from  PPT’s  recent  145m  new  shares issuance, which was undertaken to help fund the acquisition of a floating, production, storage and offloading (FPSO) vessel.   

- Maintain BUY with a lower TP of MYR1.58 (from MYR2.15). Our new TP is based on an unchanged target P/E of 14.0x on FY14F EPS. We do expect  the  share  price  to  react  negatively  to  the  expiry  of  the  bareboat charter and EPS cuts. However, we believe investors should accumulate the  stock on  weakness,  as:  i)  the  negative  news  on  the  non-renewal  of the  MOPU  is  now  out  of  the  way,  and  ii)  we  like  PPT’s  expansion  into jackup rigs and the FPSO markets, as they will provide strong recurring income for the company moving forward.

Source: RHB