Perisai Petroleum; Buy; RM0.885
Price Target: RM1.20; PPT MK

Perisai announced that its 51%-owned subsidiary, the Intan Group has entered into a 3-year charter agreement with Ezra Holdings (16% stake in Perisai) for the charter of its 8 offshore support vessels (OSVs) for US$40m (~RM123m). The agreement comes as part of the renewal for its 3 vessels that have expired on 31 Aug 12 as well as revisions for the remaining 5 vessels (yet to expire).

There is no chance to our earnings forecast as we have earlier anticipated the renewals for its existing OSVs. The contract daily charter rate of US$36,630 is similar to our estimate for FY12-14 which accounts for ~8% of Perisai’s earnings. The charter agreement is a recurrent party transaction where shareholderes’ approval has been secured at the EGM held on 27 June 12.

We continue to like Perisai for its strong earnings visibilty due to long-term charters for its key assets, namely MOPU and Enterprise 3 (pipe-laying vessel). We reiterate our Buy rating and RM1.20 TP based on 12x FY13 EPS.

Source: HwangDBS Research - 19 Sep 2012