excelyou

Rating Fair Value
Current RM1.06
Kenanga Trading Buy RM1.18
Consensus Buy RM1.44

2012-10-19 13:37

excelyou

An oil and gas support services provider, is poised to move one notch up the ladder in the supply chain of the industry by going into the lucrative FPSO market. Perisai is looking at acquiring stake in a FPSO vessel from its shareholder Ezra Holdings Ltd and the vessel is to be used for providing services to an offshore O&G field in Malaysia .
A consortium led by Ezra has put in a bid to supply the FPSO vessel to cater to the North Malay Basin oil field located off the coast of Terengganu and Kelantan. While reports said Ezra’s wholly owned subsidiary bagged the job, industry executives said nothing has bee firmed up yet and there is challenge from a consortium led by MISC Bhd
Perisai is eyeing a stake in the FPSO vessel from Ezra’s 46.5% unit EOC Ltd, which is listed in Oslo , to fulfill the localization needs, should they arise. It is still being mulled over. It depends on how things develop. If localization is required, Perisai may buy the FPSO.
In the oil and gas’s support services industry, the FPSO segment is considered a better area because of the long term charter. A typical charter is for a minimum of three years and will normally continue as long as the field is producing.
The biggest FPSO licensed holder for Petronas is MISC. The other notable FPSO provider is Bumi Armada but its vessels are mainly chartered for overseas offshore fields.

Perisai should not face any difficulties in funding to purchase the FPSO, as the acquisition will be backed by a long term charter contract. The cost of the FPSO could range from US$300 million to US$500 million.

Ezra’s stake in Perisai is held under two of its units – HCM logostics Ltd and Emas Offshore Sdn Bhd. Following the development in the North Malays Basin , it has been speculated that Emas Offshore has been awarded the contract to provide the FPSO by Petronas Carigali and Hess group JV.

In July 2012, Perisai MD Zainol Izzet emerged as a 7.75% stake by exercising an option with HCM Logistics. After the exercise, Ezra’s interest in Perisai is down to 16.1%.

The shareholder structure now (Oct 2012) allows Perisai to acquire O&G assets. This is because Ezra could raise its stake in Perisai without having to trigger a general takeover.

As at end June 2012, Perisai had cash and bank balances of rm15.91 million and rm287 million in long term borrowings and rm178 million in current liabilities.

It was earlier reported that Bumi Armada had teamed up with Emas Offshore in bidding for the North Malay Basin job and MISC, a 62.7% unit of oil major Petronas, had teamed up with LTH controlled Ramunia Holdings Bhd.

2012-10-19 13:41

excelyou

Coming months, the first acquisition could be a stake in Emas Offshore’s (EOC) FPSO.
In order to exchange for stakes in the FPSO, Perisai could either issue more shares, or raise capital through rights issue.Recall that EOC which is also Ezra's 46.5% associate, was reported to have received a Letter Of Intent to supply and operate a floating, production, storage and offloading vessel to HESS, for the Kamelia gas field.
EOC still needs to meet strict domestic content requirements for off-shore projects, and it could be salvaged through Perisai’s 40%-owned Larizz Petroleum which is licensed to bid for local contracts.

Calculation shows that by securing a 50% stake in a US$300m FPSO is expected to raise the company’s fair value by RM300m or RM0.53 per share, assuming a project internal rate of return of 15%, while enhancing earnings by RM38m per year.

Meanwhile, the market is speculating a second asset acquisition (besides the FPSO for HESS), but the value is unknown at this juncture. This is another project that provide a catalyst to Perisai shares.

2012-10-19 13:49

Hong2

Thanks for sharing, Excelyou

2012-10-19 13:51