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Tuesday, November 8, 2011

PERISAI - MOPU conversion delay clips Garuda’s wings in FY11 (CIMB)

A holdup in MOPU conversion has pushed back the completion of Perisai’s purchase of Garuda by three months to Dec. The good news is that the MOPU has started working at the Bekok C field and Perisai should close FY11 with a tripling of EPS even with the MOPU delay.
The delay results in an EPS downgrade for FY11 only. Our target price also drops as we roll it forward and use our CY13 target market P/E of 12.6x instead of our CY12 P/E of 14.5x. Fleet expansion and potential marginal field jobs support our OUTPERFORM call.

We advise investors to accumulate this undervalued stock aggressively. Its EPS CAGR is hard to beat and the stock offers the most share price upside in our oil & gas portfolio. Despite this, FY12-13x P/Es are under 6x, making Perisai the cheapest stock in the portfolio. Potential marginal field contracts, which may require MOPUs, add to the attraction. (TP:1.45)

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