PERISAI: BUY, target price RM0.70

HWANGDBS Vickers Research Sdn Bhd has initiated coverage on Perisai Petroleum Teknologi Bhd (0047) with a "buy" call and 70 sen price target, noting that the company has been shedding its non-core and non-profitable assets to achieve a leaner structure to focus on acquiring specialised assets for local deepwater projects.

Its analyst Lee Wee Keat believes that Perisai's new managing director Zainol Izzet is the right person to steer the company into the deepwater segment given his past experience as chief executive officer in SapuraCrest Petroleum.

"Separately, Perisai's crown jewel - a derrick pipelay barge - has a long-term charter contract ending mid-2013, thus providing clear earnings visibility," Lee wrote in a report dated June 29 2010.

"We understand that Perisai is looking to acquire vessels that can cater to Petronas' deepwater fields. In our view, this could be in the form of asset injection by Ezra.
"However, such asset is not cheap and usually costs over US$100 million (RM325 million) per vessel. Also, construction of a newbuild takes time, one to two years, and could be subjected to delays," said Lee.

Hence, he believes that Perisai will leverage on Ezra Holdings Ltd's fleet size and deepwater expertise to penetrate the local deepwater market.

Singapore-based Ezra is the second largest shareholder in Perisai after acquiring a 19.9 per cent stake for RM64 million or 48.5 sen per share on April 10.


- by Business Times