ASL Marine

OCBC on 16 Aug 2012

ASL Marine (ASL) reported a 26.3% increase in revenue to S$117.0m and a 42.3% rise in net profit to S$8.3m in 3QFY12 such that FY12 net profit (S$32.3m) accounted for 99% and 97% of ours and the street’s full year estimates, respectively. Excluding a provision made due to a customer’s financial difficulties, PATMI would have been S$37m. Management shared that it will focus on securing more repair and conversion jobs for FSOs, FPSOs and oil rigs. The group has also seen increased activity in the OSV market. ASL’s shipbuilding order book stood at about S$586m as at 30 Jun, and 53% of this is should be recognized in FY13, providing good earnings visibility. We adjust our estimates with the improved outlook, and our fair value estimate rises from S$0.75 to S$0.82. Maintain BUY. Meanwhile, ASL has also declared a final cash dividend of 1.75 S cents per share, up from 1.5 S cents last year.

Good 4QFY12 results
ASL Marine (ASL) reported a 26.3% increase in revenue to S$117.0m and a 42.3% rise in net profit to S$8.3m in 3QFY12 such that FY12 net profit (S$32.3m) accounted for 99% and 97% of ours and the street’s full year estimates, respectively. Gross profit margin was higher at 15.3% in 4QFY12 vs 14.7% in 4QFY11 and 14.0% in 3QFY12. We note that a provision of S$4.7m was made against an amount owing from subsidiaries of PT Berlian Laju Tanker after the customer ran into financial difficulties; excluding this would boost PATMI to around S$37m (up 16% compared to FY11).

Enhancing offshore capabilities
For the repair and conversion division, the group will focus on securing more conversion and major repair and refurbishment jobs for FSOs, FPSOs and oil rigs (there are currently six older jack-up rigs that are under repair/upgrade in ASL’s yards). The group has also expressed its desire to develop its capabilities in offshore fabrication works.

Orderbook provides visibility
ASL’s shipbuilding order book from external customers stood around S$586m as at 30 Jun 2012, and 53% of this amount is expected to be recognized in FY13. This means that the group may book shipbuilding revenue of S$312m in FY13, a 40% increase over FY12. However, FY13 is likely to be a backend-loaded year for the shipbuilding division. Meanwhile, ASL also has an outstanding order book of about S$59m with respect to long-term ship chartering contracts.

Ups dividend to 1.75 S cents per share
The group has seen increased activity in the sale-and-purchase of offshore support vessels, in particular smaller PSVs and larger AHTS vessels. We adjust our estimates with the improved outlook, and our fair value estimate rises from S$0.75 to S$0.82 (based on 10x FY13F core earnings). Maintain BUY. Meanwhile, ASL has also declared a final cash dividend of 1.75 S cents per share, up from 1.5 S cents last year.