KUALA LUMPUR: CIMB Research maintains its 'add' rating on Perisai Petroleum Bhd with full deployment of assets being the potential re-rating catalyst.
"We spoke to management and learned that Rubicone and E3 are likely to remain unemployed until year-end. We had expected both assets to be contracted in second half (H2) 2014 after completing their contracts in Sept 2013.
"Perisai's jack-up Perisai Pacific 101 (PP101) is set to start servicing its first contract next month, reversing the current earnings profile that is
challenged by the idling of mobile offshore production unit Rubicone and pipelay barge Enterprise 3 (E3).
"Having learned from management that the downtime of both assets is likely to extend until year-end, we now lower our financial year (FY) 2014 earnings per share (EPS) as we had expected the two assets to be put back to work in H2 of 2014.
"We maintain our FY 2015-16 earnings per share (EPS) and continue to value the stock at 16.4 times current year 2015 price-earnings, a 30 per cent discount to the oil & gas big caps," said CIMB in its reserach notes.
CIMB said it is a double blow for Perisai with Rubicone and E3 not working.
"Although we are disappointed with the extended downtime of the two assets, we draw some comfort from the commencement of PP101's contract next month, marking a new business and income stream for Perisai.
"PP101 should be able to help cushion the earnings weakness brought about by the idling of the two assets and contribute to the company's turnaround in H2 of 2014.
"Launched last week, PP101 will be deployed to Petronas Carigali on a three-year US$158 million contract. The contract works out to a daily charter rate of US$144,292, which is in line with the market rate.
"Furthermore, the company's floating production storage and offloading (FPSO) vessel Perisai Kamelia which started production in Nov 2013 will contribute for the first full year this year. Nonetheless, we cut our FY 2014 EPS to reflect the absence of contributions from Rubicone and E3 for the whole year."
CIMB noted looking beyond the anticipated soft FY 2014 performance caused by the downtime of Rubicone and E3, FY 2015 and FY 2016 are set to be substantially stronger years as all the assets to be fully deployed.
"The second and third jack-ups are slated for delivery in mid-FY 2015 and mid-FY 2016, respectively. Perisai has yet to secure contracts for the two newbuilds."