Perisai: Can collect at RM0.45 ~ RM0.55? (Question from our community member - 6 Dec 2014)

Perisai background : As at 6/12/2014
P/E 2013 : 7.3 (Price 0.53 /Basic EPS 7.29) – Price closing as at 5/12/2014
Rolling 4Q P/E : 815 (Price 0.53/Basic EPS 0.065)
0.05 Q4 2013 + (0.28) Q1 2014 + 0.08 Q2
2014 + 0.19 Q3 2014
= 0.065
Forward P/E : [(Q1 2014 + Q2 2014 + Q3 2014)/3] X 4
: [(-0.28 + 0.08 + 0.19)/3] X 4
= 0 (VALUE IS NEGATIVE)
(To estimate full year 2014)

P/BV : 0.59 - PASS
NTA : 0.757 - PASS
Dividend yield : 0 - FAIL

Current Ratio : 1.55 - PASS
Quick Ratio : 0.7 – FAIL
Debts/Equity Ratio : 0.5 – PASS

From the numbers above, it fails Dividend Yield and Quick Ratio and passes other 4 Ratios for Health Analysis. It is even trading around 30% below NTA. Should we call it a buy? NO.

There are few ways to read the P/E. Historically 2013 P/E looks good @ 7.3x. When you fast forward to rolling 4 quarters, the P/E is 815! Means you need 815 years to recoup your investment! Let’s look further on my simple estimation on 2014 FULL YEAR result. The P/E is NEGATIVE! It means the profit is not there for 2014! How about 2015?

During the good times (Q1 and Q2 2014), Perisai NOT ABLE TO DELIVER A GOOD EPS hence it brought down the share price. Before you buy, the main condition to be met is the Company must be in GOOD HEALTH!
Secondly, the OPPORTUNITY TO GROW THE BUSINESS. A quick glance on Perisai details, they have a SGD700m MTN Facility issued on 19 Aug 2013. SGD102m has been issued (drawdown) at 6.875% around July 2014.

There are 4 problems here:

1. Total Receivables has balloon from 60m (2013) to 274m (2014)
=poor in collecting money

2. Short term borrowing has balloon from 9.5m (2013) to 100m (2014)
Long term debts has balloon from 273m (2013) to 1b (2014)
-Total borrowings around RM1.1b, hence IF THE
EARNINGS DOES NOT COMES IN FAST, PERISAI
WILL BE HAVING A TOUGH TIME TO SERVICE THEIR
INTERESTS.

3. Do you notice the MTN (Medium Term Note) is denominated in SGD @ 6.875%?
- In a layman term, borrow in SGD, repayment also in SGD. When Perisai did drawdown the facility on July 2014, the forex for MYR/SGD is around 2.5. Now is around 2.65. Most analysts anticipating a further drops in RM. Now you know why Perisai prices never recovers.

4. EPF disposal of Perisai.
- As a minority, normally I would follow our Institutional Funds. If EPF disposing the shares consistently (with all their market intelligence), I would not dare to touch yet.

AS A MINORITY, WHAT AM I GOING TO DO?

‘Base on info, value and react!’

1. Oil Price not yet stabilize, RM most likely to weaken further, EPF is disposing, High Debts.
2. Their Jack up rigs is god to use but market foresee a soften charter rates (no one can guess what will be the future rates are but the cost is fixed while future income is not confirmed).

Assuming RM1.1b debts at interest rate of 6.875% = RM74m, further impacted by currency 2.5 to 2.65 (different of 0.15. Another 6% variance – I am not sure how much are from SGD denominated, just a forecast). Fundamentally wise, I WILL NOT BUY until I get clarification on:

1. Oil Price and RM Stabilization
2. EPF stops selling
3. Able to service their Interests for the next few quarters

P/S: If you really love the stock and not wishes to ‘RUN CHICKEN’, perhaps you may use TECHNICAL CHART to plot your entry and buy in staggered basis. Sept 2011 low is 0.45 while another low is Mac 2010 @ 0.42.

Personally I will not buy. It the price goes up, well it is just not my luck to own Perisai

Good luck.

Regards,

Humble Pie,