A rising name in offshore drilling

A rising name in offshore drilling
Business & Markets 2013
Written by SJ Securities
Tuesday, 04 June 2013 10:26

[You must be registered and logged in to see this image.]

A + / A - / Reset
PERISAI PETROLEUM TEKNOLOGI [] Bhd
(June 3, RM1.60)
Initiating coverage with overweight rating at RM1.62 with a fair value of RM2.05: Perisai, founded in 1994, specialises in corrosion control solutions for the oil and gas (O&G) industry. It was initially listed on Mesdaq and subsequently moved to the Main Market in 2009.

Over the years, Perisai has undergone several major overhauls in its business directions and strategy. It has disposed of the corrosion control business and has become an integrated offshore marine vessels provider that supports the local upstream development, exploration and production (E&P) of the O&G sector.

Currently Perisai is operating in three business segments: (i) offshore CONSTRUCTION []; (ii) offshore support vessels (OSV); and (iii) offshore production.

Perisai has been on a niche asset acquisition path since last year. Its three latest niche asset acquisitions are a floating production storage offloading (FPSO) vessel and two jack-up drilling rigs. Perisai is targeting to expand its business by adding at least one revenue generating asset per year. Acquisitions of niche assets often require higher initial costs, which act as a barrier to those intending to enter the highly rewarding drilling and production segments.

With a current still low gearing ratio of around 0.7 times, Perisai is still able to acquire new assets.

It has been positioning itself as an offshore marine asset provider that offers fleets of niche and strategic assets, rather than just focus on the existing bareboat chartering of its vessels.

The addition of the FPSO and drilling rigs will redefine Perisai’s business model from a bareboat charterer to a provider of production assets.



Petroliam Nasional Bhd (Petronas) has allocated a large capital expenditure (capex) of RM300 billion for the next five years to position Malaysia as a regional hub for O&G. About 70% of the capex will be assigned for E&P activities to boost Malaysia’s oil production.

We are expecting more contracts to be awarded by Petronas in the second half of 2013. With the implementation of the Cabotage policy that prioritises locally flagged operators bidding for the contracts, we are confident that Perisai can secure its maiden contract before the delivery of the first rig in July 2014.

We are optimistic that with the group’s direction and strategy, its FY14 earnings will get a boost from contributions from the production segment and two drilling rigs.

We have an “overweight” recommendation with a target price of RM2.05 based on the offshore marine industry price-earnings ratio of 13 times pegging to its FY14 earnings per share of 15.9 sen. — SJ Securities, June 3


This article first appeared in The Edge Financial Daily, on June 4, 2013