ASL Marine (ASL) reported a 26.6% YoY rise in revenue to S$144.0m and a 21.0% increase in net profit to S$9.6m in 3QFY13, such that 9MFY13 net profit accounted for about 71% of our full year estimates, within our expectations. Gross profit margin dropped from 14.0% in 3QFY12 to 13.0% in 3QFY13, and this was mainly due to lower shipbuilding margins and the inclusion of the Vosta LMG business. Looking ahead, the group expects the outlook of the offshore and marine industry for this year to be “good”, although competition seems to be increasing. We like ASL for its prudent management, healthy order books, diversified business model and growth potential from Vosta over the longer term. Maintain BUY with S$0.86 fair value estimate, based on 10x blended FY13/14F core earnings.
3QFY13 results within expectations
ASL Marine (ASL) reported a 26.6% YoY rise in revenue to S$144.0m and a 21.0% increase in net profit to S$9.6m in 3QFY13, such that 9MFY13 net profit accounted for about 71% of our full year estimates, within our expectations. Following the ~5m euros acquisition of VOSTA LMG in Dec last year, the business was consolidated in ASL’s financial results in 3QFY13.
Lower shipbuilding margins and consolidation of Vosta
Gross profit margin dropped from 14.0% in 3QFY12 to 13.0% in 3QFY13, and this was mainly due to lower shipbuilding margins (9.1% vs 11.9% in 3QFY12) and the inclusion of the Vosta LMG business which had a lower gross margin than the other divisions in 3QFY13. Shiprepair and conversion registered a higher gross margin of 28.2%, mainly due to write-back of subcontractor costs for earlier projects. Excluding the write-back, margins would have been 19.6%.
Positive outlook, but competition stiffer
ASL Marine expects the outlook of the offshore and marine industry for this year to be “good” ; utilization and charter rates for AHTS and PSVs have improved and enquiry levels for offshore construction vessels and AHTS vessels remain healthy. However, margins may be impacted by stiffer competition from Chinese shipyards which have seen a plunge in new bulk carrier and containership orders. Meanwhile, although the shorter term outlook for dredging and land reclamation is mixed, the group expects more dredging companies to upgrade their equipment in the future, benefiting the newly acquired VOSTA LMG division.
Healthy order books
The group’s shipbuilding net order book (comprising 32 vessels) stood at S$458m as at 31 Mar 2013 with progressive recognition up to 4QFY14, providing revenue visibility. ASL also has an outstanding order book of about S$78m with respect to long-term shipchartering contracts. We like ASL for its prudent management, healthy order books, diversified business model, and growth potential from Vosta over the longer term. Maintain BUY with S$0.86 fair value estimate, based on 10x blended FY13/14F core earnings.
ASL Marine (ASL) reported a 26.6% YoY rise in revenue to S$144.0m and a 21.0% increase in net profit to S$9.6m in 3QFY13, such that 9MFY13 net profit accounted for about 71% of our full year estimates, within our expectations. Following the ~5m euros acquisition of VOSTA LMG in Dec last year, the business was consolidated in ASL’s financial results in 3QFY13.
Lower shipbuilding margins and consolidation of Vosta
Gross profit margin dropped from 14.0% in 3QFY12 to 13.0% in 3QFY13, and this was mainly due to lower shipbuilding margins (9.1% vs 11.9% in 3QFY12) and the inclusion of the Vosta LMG business which had a lower gross margin than the other divisions in 3QFY13. Shiprepair and conversion registered a higher gross margin of 28.2%, mainly due to write-back of subcontractor costs for earlier projects. Excluding the write-back, margins would have been 19.6%.
Positive outlook, but competition stiffer
ASL Marine expects the outlook of the offshore and marine industry for this year to be “good” ; utilization and charter rates for AHTS and PSVs have improved and enquiry levels for offshore construction vessels and AHTS vessels remain healthy. However, margins may be impacted by stiffer competition from Chinese shipyards which have seen a plunge in new bulk carrier and containership orders. Meanwhile, although the shorter term outlook for dredging and land reclamation is mixed, the group expects more dredging companies to upgrade their equipment in the future, benefiting the newly acquired VOSTA LMG division.
Healthy order books
The group’s shipbuilding net order book (comprising 32 vessels) stood at S$458m as at 31 Mar 2013 with progressive recognition up to 4QFY14, providing revenue visibility. ASL also has an outstanding order book of about S$78m with respect to long-term shipchartering contracts. We like ASL for its prudent management, healthy order books, diversified business model, and growth potential from Vosta over the longer term. Maintain BUY with S$0.86 fair value estimate, based on 10x blended FY13/14F core earnings.
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