Triyards Holdings

UOBKayhian on 27 June 2014

FY14F PE (x): 5.7
FY15F PE (x): 6.5
Advanced negotiations to secure two lift-boat contracts from US-based liftboat players.
Management updated that it is currently in various stages of discussion for 8-10 liftboat
enquiries, of which 2 of them are in advanced negotiations. The liftboat enquiries are
from various geographical markets like the US, Middle East, Malaysia and Singapore.
Of the enquiries, management remains optimistic on securing two orders from leading
US based liftboat operators, who are keen to penetrate into Asian liftboat markets. The
liftboat contracts, if secured, are expected to be worth US$80m-100m (excluding
owner- furnished equipments).
Awaiting contract wins to boost its falling orderbook. Triyards’s current orderbook
stands at US$130m-140m (excluding US$25m for Lewek constellation), down from
US$217m at the beginning of FY14 as contract wins have not kept pace with reducing
orderbook. Management noted that one reason for the delay in contract wins is due to
longer time-frame taken by owner operators to finalise design considerations before
placing orders. Ytd, Triyards has secured US$67m worth of orders lagging our full-year
expectations of US$300m.
Maintain BUY with a lower target price of S$0.82 (previously S$0.86), pegged at 1.0x
FY15F P/B, which is at a 60% discount to the long-term 1-year forward P/B mean of
1.66x for the OSV-shipyard segment of the offshore & marine sector. In our view, a P/B
valuation methodology is more appropriate than PE as Triyards’s current earnings do
not reflect the potential of its proprietary SEU designs.