Tuesday, November 5, 2013

Jaya Holdings - Keeping the pace (CIMB)

Jaya Holdings -
Current S$0.69
Target S$0.90
Keeping the pace

Jaya started 1QFY6/14 in the same fine fashion that it ended 4Q13, sustaining its fleet utilisation at 91%. We expect the stock to be re-rated as its endeavour to change its earnings profile from a lumpy to a recurring one has started to bear fruit.

At 25% of our full-year numbers, 1Q core earnings were in line with our expectation but 20% below Bloomberg consensus. We keep our FY14-16 EPS and maintain an Outperform rating with a higher target price as we roll forward to 1x CY14 P/BV (its 4-year mean). Catalysts could come from stronger chartering operations, shipbuilding wins and clarity from the strategic review.

Keeping the pace
As expected, Jaya recorded US$8m core earnings for 1Q14, a 21% yoy drop in the absence of shipbuilding contributions. However, its chartering revenue grew by 12% yoy and EBITDA by 9% yoy, thanks to a higher utilisation of 91% (1QFY13: 84%), higher vessel yields as reflected by a higher time charter proportion (87% for 1QFY14 vs. 68% for 1QFY13) and a higher value fleet.

The group remains in a net cash position of US$40.8m as it generated US$21.1m operating cash inflow (1QFY13: US$2m outflow). We expect US$75m cash inflow in 2Q due to the sale of its 16,000 bhp AHTS, Jaya Sovereign. Its chartering order book stands at US$255m (+30% yoy).

Delivery of two high-spec PSVs
Jaya received two high-spec 5,500 dwt PSVs in the quarter, Jaya Valour and Jaya Vigilant. Both went on-hire on long-term charters immediately upon delivery. We conservatively expect additional contributions from these vessels to be offset by lower utilisation during the monsoon season in 3QFY14.

Maintain Outperform
We see value in Jaya as it trades at 0.8x CY14 P/BV against growing and recurring chartering earnings streams, and 60% to its RNAV. The company has clearly righted its course, which we think has not been fully appreciated by the market.

Source/Extract/Excerpts/来源/转贴/摘录: CIMB-Research,
Publish date: 31/10/13

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