Oilfield Services

UOB KayHian, Dec 10

INVESTORS can no longer ignore oilfield services in 2014. New sizeable market-cap OSV (offshore support vessel) stocks will place this sector firmly on investors' radar screen.

Apart from Pacific Radiance (PacRa SP), these stocks include:

(a) soon-to-be-listed Robert Kuok's PACC Offshore Services Holdings (POSH),

(b) Jaya Holdings (Jaya SP), which is likely to make a comeback with a probable new industry-operator major shareholder at its helm, and

(c) a potential listing of Miclyn Express Offshore (MIO AU) on Singapore Exchange (SGX), after its delisting from the Australian Stock Exchange (ASX).

Pacific Radiance (not rated; market cap: S$653 million). Recently listed on SGX, Pacific Radiance has two principal businesses: (i) offshore support services (OSS); (67 per cent of H1-13 turnover), and (ii) subsea services (26 per cent of H1-13 turnover).

The group has a fleet of 131 OSVs, of which 60 are wholly-owned and 71 are operated by associates and joint ventures (JVs). There are 17 new vessels pending delivery.

As of end-3Q13, NBV of its own fleet was US$466m (including US$58m relating to vessels under construction).

Pacific Radiance is managed by a team of industry veterans, headed by executive chairman Pang Yoke Min who was the co-founder of Jaya and its managing director from 1981 to 2006.

POSH (pending listing in 1Q14; expected market cap: >S$1 billion). POSH, the oilfield services arm of the Robert Kuok group, is targeting for a listing on SGX in Q1-14.

POSH is an OSV provider. It also handles transportation, towing, mooring and installation services as well as services for oil spill and salvage operations. POSH has a fleet of 114 vessels, while 14 vessels are on order.

As of end-2012, its fleet NBV (net book value) was US$767 million (including US$166 million relating to vessels under construction).

POSH operates mainly in Asia, but has presence in Africa, Europe and India.

Jaya Holdings (not rated; market cap: S$521m). According to industry sources, a new industry-operator major shareholder is likely to emerge. Australia's Mermaid Marine (MRM AU; market cap: A$728 million) is rumoured to be the successful bidder for Deutsche Bank's 53 per cent stake in Jaya. Jaya has gone through numerous major shareholder changes in the last decade (Sime Darby in 2004, Nautical Offshore Services in 2006, and Deutsche Bank in 2011).

A new industry-operator major shareholder should augur well for the group. Jaya is an OSV provider as well as a shipbuilder. It has a fleet of 28 OSVs, while seven vessels are pending delivery. It also operates two OSV shipyards.

As of end-Jun 13, NBV of fleet was US$406 million (of which US$45 million related to vessels under construction). Geographically, Asia contributed 64 per cent of OSS revenue, Africa per cent,and others 16 per cent.