Maintain BUY. The proceeds from Perisai’s share placement exercise (to be utilised for the purchase of a second rig) will lead to a small dilution to EPS over the next two years owing to the enlarged share base (+4-8%). Nonetheless, earnings contribution will be felt from FY15 when the second rig is chartered out and EPS enhancement will continue. Our TP is unchanged, pegged to 11x FY14 PER.

Fixed placement price at MYR1.03. At MYR1.03/share, this is a 4.4% discount to Perisai’s 5-day volume weighted average market price (VWAP) of MYR1.08/share. Perisai will raise MYR87.7m cash, from the 85.1m of new shares to be issued. We anticipate a full take-up of these shares, owing to Perisai’s strong earnings visibility and growth prospects. The exercise is expected to be concluded soon.

A second rig in the pipeline. With this placement exercise in place, we see a high likelihood that Perisai will exercise its option to secure a second rig from PPL Shipyard before the option lapses in Feb 2013. The second rig, which is priced at a pre-agreed USD210m, will be ready for delivery by Jul 2015. We are confident of Perisai securing contract(s) for these rigs, as it benefits from the positive import substitution effect and rising drilling activities here.

Contributions from the second rig will only be reflected in FY15. Apart from this placement exercise, our forecasts have imputed the: (i) purchase of a 51% stake in FPSO Arunothai and (ii) sale of a 50% stake in E3, which will see the issuance of 144.7m shares to EOC. Accordingly, Perisai’s share base will increase to 1,081.6m shares (+27%). The earnings contribution from the second rig has yet to be reflected into our estimates, for it will only come in in FY15. Meanwhile, foreign shareholding level (ex major shareholders) stood at around 4%.

Source: Maybank Research - 23 Jan 2013