Monday, December 16, 2013

Jaya Holdings : Harvest time (CIMB)

Jaya Holdings
Current S$0.68
Target S$0.90
Harvest time

After three years of trials and tribulations, we believe that Jaya has firmly corrected its course. The tangible beacon was the full-year DPS of 4 Scts for FY13. As its endeavours to change its earnings profile (from a lumpy one to a recurring model) have started to bear fruit, we expect the stock to be re-rated.

Our FY14-16 forecasts and target price, still based on 1x CY14 P/BV (its 4-year mean), are intact. Under our new rating structure, our call changes from Outperform to Add. Catalysts could come from stronger chartering operations and shipbuilding wins.

Chartering goes from strength to strength
Backed by higher vessel yields (as reflected by a higher time charter proportion) and a higher value fleet, we expect the EBITDA for ship chartering to increase by 15% yoy to US$64.8m for FY14. We also anticipate that the company will add four PSVs and one 12,000bhp AHTS to its fleet in FY14. All of the PSVs have secured a contract.

Sale of a 16,000bhp AHTS
In addition, the company will take delivery of an ice-class 16,000bhp AHTS in Jan 2014, which has been committed to a sale. Named the Jaya Sovereign, this is a sister vessel to another unit which was sold to the same customer, Atlantic Towing, for an estimated US$72m in Nov 2012. Jaya then incurred a US$1m-2m loss for the vessel due to its high input costs. Equipment was ordered at the peak of a supplier‟s market, while the vessel had also accumulated over five years of overhead costs due to legacy issues. This time round, the sale will result in a small profit. More importantly, the sale will release US$73m-74m of cash. We estimate that the company will be in a strong net cash position of US$119m or S$0.19/share after the sale.

Add to portfolio
We see value in Jaya as it now trades at 0.8x P/BV and 60% of its RNAV amid growing earnings streams from chartering (that are recurring in nature). The company has clearly corrected its course, and we think that this has not been fully appreciated by the market.

Source/Extract/Excerpts/来源/转贴/摘录: CIMB-Research,
Publish date: 29/11/13

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Tan Teng Boo

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