Perisai Petroleum Teknologi (PPT)’s 3QFY13  core  net  profit  (including profit from discontinued operations) improved 13%  y-o-y. 9MFY13 core net  profit,  while  mitigated  by  non-depreciation  under  the  provisions  of MFRS 5 ‘non-current  assets  held  for  sale  &  discontinued  operations’, declined by 13.8% y-o-y. Maintain BUY, with our earnings estimates and MYR1.58 FV unchanged, based on a target FY14 P/E of 14x. 
 
- 9MFY13 revenue inches up 1.3%  y-o-y.  The marginal improvement in revenue  was  due  to  a  higher  foreign  currency  conversion  in  9MFY13, which  softened  the  impact  of  the  termination  of  the  derrick  lay  barge charter contract before end-3QFY13.  

- Expecting weak 4QFY13. 4QFY13  will likely take earnings hits from: i) the  expiry  of  the  group’s  two-year  mobile  offshore  production  unit (MOPU) charter contract with Gryphon Energy in Sept 2013, and ii) the termination  of  the  derrick  lay  barge  contract  with  TL  Offshore,  a subsidiary  of  SapuraKencana  Petroleum  (SAKP  MK,  BUY,  FV: MYR4.96). That said, we expect the blow to be softened by contributions from its recent acquisition of a floating production, storage and offloading (FPSO)  vessel,  Perisai  Kamelia,  which  has  been  contracted  to  HESS Exploration  and  Production  Malaysia  BV  on  a  3+1+1+1  year arrangement.  The  total  value  of  the  contract  is  USD543m,  with  the primary charter worth MYR272m. Perisai Kamelia has been deployed to the Kamelia Field of North Malay Basin since mid-2013.

- Mid- to long-term outlook still good. We remain positive on the stock considering:  i)  the  upcoming award  of  the  Pan  Malaysian  transport  and installation  (T&I)  project,  which  may  employ  the  use  of  its  derrick  lay barge,  and  ii)  potential  contracts  upon  accepting  delivery  of  its  first drilling  rig,  Perisai  Pacific  101,  by  end-July  2014.  Its  second  rig  is scheduled to be delivered by 2QFY15.  

- Maintain BUY and MYR1.58 FV. Due to an internal transfer of coverage and  pending  our  meeting  with  management,  we  retain  our  FY13/FY14 earnings  estimates  and  keep  our  MYR1.58  FV  unchanged,  based  on  a target P/E of 14x on FY14 EPS. Maintain BUY.

SWOT Analysis

Company Profile

Perisai    Petroleum  Teknologi  (PPT)  is    an    oil    &    gas    service    provider    owning    a    floating    production,    storage    and    offloading  (FPSO)  vessel,  a  mobile operating production unit (MOPU), a pipelay barge and eight offshore support vessels (OSVs) with up to two jack-up rigs on order. 

Recommendation Chart

Source: RHB