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R E S U L T S

U P D A T E

TA Securities
A Member of the TA Group

Thursday, February 26, 2015


FBMKLCI: 1,815.86
Sector: Oil & Gas

MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048

TP: RM0.65 (+5%)

Perisai Petroleum Teknologi Bhd


FY14 A Washout Year

Last Traded: RM0.63

SELL

THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY*

TA Research Team Coverage

Tel: +603-2167 9601

kyliechan@ta.com.my

Review


Perisai Petroleum Teknologi Bhd (Perisai) reported FY14 core net profit of
RM12.3mn (-80% YoY), which was below our expectations but above
consensus, accounting for 78% and 117% of full-year estimates
respectively. Core net profit excludes loss on disposal of two cold-stacked
vessels (RM1.4mn) and unrealised FX gains (RM2.9mn).

The shortfall vs. our estimate was largely attributed to higher finance costs
that almost doubled compared to FY13. This was due in large part from
drawdown of the groups MTN facility whereby interest costs for this fixed
instrument amounted to RM8.4mn.

4Q14 was propped up by first full quarterly contribution from Perisai


Pacific 101 jackup rig that commenced its maiden project with Petronas
Carigali in Aug 2014.
Meanwhile, the YoY bottomline dip was mainly attributed to absence of
charters for both MOPU Rubicone and E3, which remain out of job since
4Q13. Nevertheless, contributions from FPSO Kamelia partially propped up
profits.

Share Information
Bloomberg Code
Stock Code
Listing
Share Cap (mn)
Market Cap (RMmn)
Par Value (RM)
52-wk Hi/Lo (RM)
12-mth Avg Daily Vol ('000 shrs)
Estimated Free Float (%)
Beta
Major Shareholders (%)

Forecast Revision (%)


Forecast Revision (%)
Core Net Profit (RMm)
Consensus
TA/Consensus (%)
Previous Rating
Scorecard

vs TA
vs Consensus

For FY16-17, we assume that Rubicone/E3 will be chartered out at lower


rates of USD55K/USD40K (previous: USD59K/55K). As a conservative
measure, we also removed 6-months contribution from both of these assets
in FY16.

In addition, given softer crude oil prices, we reduce our DCR assumptions
for newbuild rigs PP102 and PP103 (delivery: 2Q15 & 3Q16) to USD140K145K (previous: USD160K-164K).

As a result, our FY15/16 earnings are slashed by 34%/17%. In addition, we


introduce FY17 earnings forecast.

Valuation

PPT MK
0047
Main Board
1,193
745
1.00
1.73/0.93
11,947
56
3.00
Ezra Group- 23.6
EPF - 7.5
Mercury Pacific - 7.3

Impact
We remove MOPU Rubicone and E3s contribution for FY15 (previous: 9
months) given that the prospects of these assets securing a contract in the
near term appear dim on the back of capex cuts by oil majors. Although
there is a possibility of Rubicone being deployed at PM-9 oilfield offshore
Terengganu, there is risk of further delay.

www.taonline.com.my

FY15
FY16
-34
-17
75.8
165.6
70.8
132.9
107
125%
Buy(Downgrade)

% of FY
78 Below
117 Above

Financial Indicators
Net Debt/Equity (%)
FCF per share (RM)
P/FCF (x)
ROA (%)
NTA/Share (RM)
P/NTA (x)

FY15
37.7
47.3
0.0
3.8
0.82
0.8

FY16
51.5
(20.5)
(0.0)
6.3
0.96
0.7

Share Performance
Price Change (%)
1 mth
3 mth
6 mth
12 mth

PPT
28.9
-15.0
-54.0
-61.4

FBMKLCI
1.1
-1.4
-2.5
-0.4

(12-Mth) Share Price relative to the FBM KLCI

On the back of our earnings cut, our TP for Perisai is thus lowered to
RM0.65 (previous: RM1.15) based on unchanged 10x CY15 P/E. As such, we
believe the stock is fully valued at current valuation, and downgrade our
recommendation on the stock to Sell (previous: Buy).

Perisais earnings faces headwinds due to DCR and margin pressure on the
back of Petronas decision to reduce capex by 15%-20% in 2015.
Competition for rig contracts will likely be heightened due to contractors
vying for a reduced pool of contracts resulting from capex cuts. Although
Perisai will most likely be favoured over foreign rig owners for local
contracts, DCR compression and the possibility of delayed contract awards
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Source: Bloomberg

TA Securities

26-Feb-15

A Member of the TA Group

are material risks.

Figure 1: Quarterly Results Analysis


YE 31 Dec
(RM mn)
Revenue
EBIT
Finance Costs
Associates
JCEs
EI
Pretax Profit
Taxation

4Q14
55.8
10.1
(9.0)
0.8
12.4
2.9
17.2
(0.0)

3Q14
44.7
3.3
(8.2)
0.9
10.5
0.0
6.5
(0.7)

QoQ%
25%
204%
n.m
-11%
18%
n.m
164%
n.m

4Q13
13.5
(14.4)
(3.5)
1.2
6.2
9.7
(0.8)
(0.0)

YoY%
314%
-170%
n.m
-32%

PAT- Cont Ops


PAT- Discont. Ops
Minority Interest
Reported Net Profit
Core Net Profit

17.1
0.0
(3.6)
13.5
10.6

5.8
0.0
(3.6)
2.2
2.2

196%
n.m.
n.m
506%
376%

(0.9)
4.5
(3.0)
0.6
(9.1)

18%
24%

7%
5%

EBIT Margin
Net Margin

n.m
n.m
n.m

YTDFY14
122.1
5.6
(23.8)
3.9
42.6
1.4
27.9
(0.6)

Cumulative
YTDFY13
111.7
41.8
(11.1)
1.6
6.1
9.7
38.0
(0.1)

n.m
-100%
n.m
>100%
-216%

27.3
0.0
(13.5)
13.7
12.3

37.9
0.0
(10.7)
71.8
62.0

5%
11%

37%
64%

n.m.
4%

YoY
9%
-87%
n.m
140%
593%
-85%
-27%
n.m
-28%
n.m.
27%
-81%
-80%

s
Figure 2: Quarterly Segmental Analysis
FYE 31 Dec (RMmn)
Segmental Revenue
Drilling
Marine Vessels
Offshore Prod Unit
Investment Holding
Group Revenue
Segmental PBT
Drilling
Marine Vessels
Offshore Prod Unit
Investment Holding
Others & Assoc
Group PBT
Segmental PBT margin
Drilling
Marine Vessels
Offshore Prod Unit
Group PBT margin

4Q14

3Q14

4Q13

43.6
12.1
0.0
0.0
55.8

33.8
10.9
0.0
0.0
44.7

0.0
12.6
21.0
0.5
34.2

5.8
7.0
(9.5)
0.0
13.9
0.8

5.1
6.9
(6.6)
0.0
1.2
6.5

0.0
6.7
13.0
(5.6)
(0.2)
13.9

58%
31%

15%
63%
15%

53%
62%
41%

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QoQ (%)

YoY%

YTD FY14

YTD FY13

YoY (%)

>100%
12%
0%
n.m.
25%

>100%
-4%
-100%
n.m.
63%

77.5
44.7
0.0
0.0
122.1

0.0
60.9
49.0
1.8
111.7

>100%
-27%
-100%
n.m.
9%

13%
2%
43%
0%
n.m.
-87%

>100%
105%
-73%
0%
n.m.
6%

10.8
27.9
(29.9)
0.0
19.1
27.9

0.0
22.2
36.6
(10.2)
(10.0)
38.8

>100%
26%
-182%
n.m.
n.m.
-28%

14%
63%
23%

36%
75%
35%

TA Securities

26-Feb-15

A Member of the TA Group

Figure 3: Earnings Summary


FYE 31 Dec (RMmn)
Revenue
EBITDA
EBITDA margin
(%)
Pretax Profit
Core Net Profit
Core EPS
(sen)
Core EPS growth
(%)
Core PER
(x)
Gross DPS
ROE

2013
111.7
81.6
73.0
38.0
62.0
5.7
(41.8)
10.9

2014
122.1
52.6
43.1
27.9
12.3
1.0
(82.0)
60.7

2015E
291.2
61.9
21.2
90.7
75.8
6.4
517.0
9.8

2016F
485.5
133.3
27.5
180.5
165.6
13.9
118.6
4.5

2017F
550.9
225.9
41.0
204.4
189.5
15.9
14.4
3.9

(sen)

1.0

(%)

7.2

1.4

6.9

13.0

12.8

Disclaimer
The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are
subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any
direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies
mentioned herein.
This report has been prepared by TA SECURITIES HOLDINGS BERHAD for purposes of CMDF-Bursa Research Scheme ("CBRS") administered by Bursa Malaysia Berhad and
will be compensated to undertake the scheme. TA SECURITIES HOLDINGS BERHAD has produced this report independent of any influence from the CBRS or the subject
company.
For more information about CBRS and other research reports, please visit Bursa Malaysias website at:
http://www.bursamalaysia.com/website/bm/listed_companies/cmdf_bursa_research_scheme/eResearch.jsp
for TA SECURITIES HOLDINGS BERHAD(14948-M)
(A Participating Organisation of Bursa Malaysia Securities Berhad)
Kaladher Govindan Head of Research

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