ASL Marine (ASL) reported a 7.3% YoY rise in revenue to S$83.0m and a 39.8% increase in net profit to S$10.6m in 2QFY13, such that results were in line with our expectations. Gross profit margin increased from 17.3% in 2QFY12 to 23.4% in 2QFY13 due to better margins in all three core business segments. Given ASL’s busy yards and healthy order book (S$528m as at 31 Dec 2012), we understand that the group will aim to start securing orders only after Jun this year. Since our last report on 3 Dec 2012, the stock has done well, with its share price appreciating by 13.8% vs the STI’s 6.7% gain over the same period. Despite this, we still see upside potential. We roll forward our valuation to blended FY13/14F earnings, still based on an unchanged PER of 10x. As such, our fair value estimate rises from S$0.82 to S$0.86. Maintain BUY.
2QFY13 results in line
ASL Marine (ASL) reported a 7.3% YoY rise in revenue to S$83.0m and a 39.8% increase in net profit to S$10.6m in 2QFY13, such that 1HFY13 net profit accounted for 48% of our full year estimates, in line with our expectations. Gross profit margin increased from 17.3% in 2QFY12 to 23.4% in 2QFY13 due to better margins in all three core business segments- shipbuilding, repair and conversion, and shipchartering.
Seeking new contracts only from mid Jun onwards
Given ASL’s busy yards, the group can only start work on new orders only in mid 2013. Along with its healthy order book, management is not in a hurry to secure new orders – we understand that ASL will aim to start securing orders after Jun this year. Meanwhile, management updated that they are still receiving healthy enquiries for AHTS vessels and DSVs, but there is less interest in PSVs, perhaps due to substantially lower prices offered by new Chinese competitors (prices may be as much as 20% lower).
Healthy order books
The group’s shipbuilding net order book (comprising 34 vessels) stood at S$528m as at 31 Dec 2012 with progressive recognition up to 4QFY14, providing revenue visibility. Out of this, about 34% will be recognized in 2HFY13. ASL also has an outstanding order book of about S$83m with respect to long-term shipchartering contracts.
Stock has done well, but still has upside
Since our last report on 3 Dec 2012, the stock has done well, with its share price appreciating by 13.8% vs the STI’s 6.7% gain over the same period. Despite this, we still see upside potential. We roll forward our valuation to blended FY13/14F earnings, still based on an unchanged PER of 10x. As such, our fair value estimate rises from S$0.82 to S$0.86. Maintain BUY.
ASL Marine (ASL) reported a 7.3% YoY rise in revenue to S$83.0m and a 39.8% increase in net profit to S$10.6m in 2QFY13, such that 1HFY13 net profit accounted for 48% of our full year estimates, in line with our expectations. Gross profit margin increased from 17.3% in 2QFY12 to 23.4% in 2QFY13 due to better margins in all three core business segments- shipbuilding, repair and conversion, and shipchartering.
Seeking new contracts only from mid Jun onwards
Given ASL’s busy yards, the group can only start work on new orders only in mid 2013. Along with its healthy order book, management is not in a hurry to secure new orders – we understand that ASL will aim to start securing orders after Jun this year. Meanwhile, management updated that they are still receiving healthy enquiries for AHTS vessels and DSVs, but there is less interest in PSVs, perhaps due to substantially lower prices offered by new Chinese competitors (prices may be as much as 20% lower).
Healthy order books
The group’s shipbuilding net order book (comprising 34 vessels) stood at S$528m as at 31 Dec 2012 with progressive recognition up to 4QFY14, providing revenue visibility. Out of this, about 34% will be recognized in 2HFY13. ASL also has an outstanding order book of about S$83m with respect to long-term shipchartering contracts.
Stock has done well, but still has upside
Since our last report on 3 Dec 2012, the stock has done well, with its share price appreciating by 13.8% vs the STI’s 6.7% gain over the same period. Despite this, we still see upside potential. We roll forward our valuation to blended FY13/14F earnings, still based on an unchanged PER of 10x. As such, our fair value estimate rises from S$0.82 to S$0.86. Maintain BUY.
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