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Monday, March 25, 2013

More upside for Perisai, target price RM1.64 (STAR)

KUALA LUMPUR: UOB Kay Hian Malaysia Research expects Perisai Petroleum to be back on investors' radar by the second half of 2013.

It said on Wednesday the catalysts are earnings contribution post its 51%-stake acquisition in the floating production, storage and offloading (FPSO) unit and winning its maiden rig contract.

"With these, we expect Perisai to re-rate in H2, 2013. We re-iterate that Perisai is the cheapest proxy to the FPSO/tender rig theme, which could offer explosive growth in the longer term and thus maintain Buy. Target price: RM1.64," it said.

UOB Kay Hian Research said Perisai's share price has traded sideways year-to-date, following an impressive run-up at end-2012.

"Nevertheless, we expect the shares to storm back by H2, 2013 as valuation rises in anticipation of rising earnings and Perisai securing its first ever rig contract.

"Besides finalising its 51%-stake acquisition in the FPSO and the commencement of earnings recognition in 2H13, the key re-rating catalyst for Perisai would be the winning of their maiden rig contract. A typical rig contract is expected to deliver RM40mil to RM50mil to bottom-line based on a charter rate of US$150,000 a day," said the research house.

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