POSH reported a 9% YoY rise in revenue to US$57.6m but saw a 49% fall in gross profit to US$8.0m in 1Q15. Net profit was only US$21k in the quarter. Though 2H15 is supposed to be stronger, it is likely to still come in below current expectations, as we were forecasting full year net profit of US$84m while Bloomberg’s consensus was US$102m. In the past several quarters, POSH’s results have been underwhelming as its Mexico JVs were a drag, and earnings contributions from its two SSAVs have been repeatedly delayed, no thanks to problems that Petrobras itself is facing. The group has also been affected by an industry-wide slowdown due to lower oil prices. On a more positive note, the group secured long-term contracts worth US$140m in 1Q15, which will commence and contribute to earnings in 2Q15. POSH Xanadu and POSH Endurance also commenced charter towards the end of 1Q15. Maintain HOLD with S$0.50 fair value estimate.
US$21k net profit in 1Q15
PACC Offshore Services Holdings Ltd. (POSH) reported a 9% YoY rise in revenue to US$57.6m but saw a 49% fall in gross profit to US$8.0m in 1Q15, accounting for 17% and 7% of our full year estimates, respectively. Net profit was only US$21k in the quarter, compared to US$36.7m in 1Q14. We do note, however, that 1Q14 was boosted by one-off items amounting to US$32.6m. Though 2H15 is supposed to be stronger, it is likely to still come in below current expectations, as we were forecasting full year net profit of US$84m while Bloomberg’s consensus was US$102m.
Mexico JV losses to be stemmed from 2Q15
Gross profit margin was 13.9% in 1Q15 vs. 29.9% a year ago as there were higher costs incurred by the OSV segment and initial costs of newly delivered vessels. The JVs in Mexico continued to incur losses, and this amounted to US$5.3m in 1Q15, similar to 1Q14. POSH has transferred the vessels to its OSV fleet as they pursue international charters.
Underwhelming performance so far
In the past several quarters, POSH’s results have been underwhelming as its Mexico JVs were a drag, and earnings contributions from its two SSAVs have been repeatedly delayed, no thanks to problems that Petrobras itself is facing. The group has also been affected by an industry-wide slowdown due to lower oil prices. On a more positive note, POSH’s financial position remains strong, and its net gearing stood at a healthy 0.5x as at end Mar 2015.
Things to look incrementally better
Meanwhile, the group secured long-term contracts worth US$140m in 1Q15, which will commence and contribute to earnings in 2Q15. POSH Xanadu (1st SSAV) and POSH Endurance (light construction vessel) also commenced charter towards the end of 1Q15. However, we push our earnings contribution for the 2nd SSAV (POSH Arcadia) to 2016 given the slowdown in new contract signings in Brazil. Maintain HOLD with S$0.50 fair value estimate, based on 9x blended FY15/16 earnings.
PACC Offshore Services Holdings Ltd. (POSH) reported a 9% YoY rise in revenue to US$57.6m but saw a 49% fall in gross profit to US$8.0m in 1Q15, accounting for 17% and 7% of our full year estimates, respectively. Net profit was only US$21k in the quarter, compared to US$36.7m in 1Q14. We do note, however, that 1Q14 was boosted by one-off items amounting to US$32.6m. Though 2H15 is supposed to be stronger, it is likely to still come in below current expectations, as we were forecasting full year net profit of US$84m while Bloomberg’s consensus was US$102m.
Mexico JV losses to be stemmed from 2Q15
Gross profit margin was 13.9% in 1Q15 vs. 29.9% a year ago as there were higher costs incurred by the OSV segment and initial costs of newly delivered vessels. The JVs in Mexico continued to incur losses, and this amounted to US$5.3m in 1Q15, similar to 1Q14. POSH has transferred the vessels to its OSV fleet as they pursue international charters.
Underwhelming performance so far
In the past several quarters, POSH’s results have been underwhelming as its Mexico JVs were a drag, and earnings contributions from its two SSAVs have been repeatedly delayed, no thanks to problems that Petrobras itself is facing. The group has also been affected by an industry-wide slowdown due to lower oil prices. On a more positive note, POSH’s financial position remains strong, and its net gearing stood at a healthy 0.5x as at end Mar 2015.
Things to look incrementally better
Meanwhile, the group secured long-term contracts worth US$140m in 1Q15, which will commence and contribute to earnings in 2Q15. POSH Xanadu (1st SSAV) and POSH Endurance (light construction vessel) also commenced charter towards the end of 1Q15. However, we push our earnings contribution for the 2nd SSAV (POSH Arcadia) to 2016 given the slowdown in new contract signings in Brazil. Maintain HOLD with S$0.50 fair value estimate, based on 9x blended FY15/16 earnings.
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