ASL Marine

[winston]

From Kim Eng:-

ASL Marine – Higher revenue and better margins on shipbuilding and repair helped ASL Marine to a 34.3 per cent rise in third-quarter profit to $14.2 million, from $10.5 million previously. Nine-month profit jumped 54.3 per cent to $42.1 million on a 21.9 per cent increase in revenue to $285.1 million.

ASL attributed this mainly to progressive recognition of more and higher-value shipbuilding contracts, a greater number of higher-value shiprepair and conversion jobs and an expanded fleet size for chartering. Q3 revenue rose 18.3 per cent to $91.7 million, from $77.5 million.

Gross profit margin improved to 18.7 per cent in the latest period, from 15.2 per cent in the previous nine months, mainly because of higher gross profit margins on shipbuilding and repair operations. Bucking the trend, in the first nine months the group also recorded a 23.4 per cent increase in other operating income to $9.2 million, mainly due to higher miscellaneous and interest income.

But administrative expenses increased 14.8 per cent, in line with the increased business activity. Earnings per share on a fully diluted basis for the first nine months amounted to 14.32 cents, while for the third quarter the figure was 5.14 cents.

[winston]

From UOB-KayHian

ASL Marine
3QFY08: Results in line with our expectations; more upside to be unlocked with yard expansion
ASL Marine (ASL) reported a net profit of S$14.3m (+32.6% yoy) for 3QFY08.
For 9MFY08, ASL reported a net profit of S$42.3m (+53.5% yoy), accounting for 72.9% of our full-year forecast.

Ship chartering. Ship chartering revenue for 9MFY08 increased 27.6% to S$64.7m due to ASL’s fleet expansion from 151 vessels to 175 vessels.

However, shipchartering recorded lower gross margins due to the following factors:-
a) lower vessel utilisations as a greater number of vessels were undergoing mandatory repair during the period, and
b) a higher proportion of charter income coming under contract of affreightment (9MFY08: 29.5%, 9MFY07: 18.0%) which generally yields lower margins.

Ship repair. Ship repair revenue for 9MFY08 increased 52.0% to S$47.0m due to an increase in the number of higher value ship repair and ship conversion jobs undertaken. Higher margins were achieved due to higher margin repair jobs and improved operating efficiencies.

Shipbuilding. Shipbuilding revenue for 9MFY08 increased 13.9% to S$173.3m due to the progressive recognition of more and higher-value shipbuilding projects undertaken. Gross margins increased primarily due to the progressive recognition of higher-value projects undertaken. Going forward, shipbuilding is expected to remain strong with ASL’s orderbook currently at S$750m.

Expansion of ship repair capacity. ASL has announced that it will be lengthening its existing graving drydock from 260m to 360m. The extension will allow the graving drydock to accommodate the repair of larger vessels (capsize class). ASL has also commenced works to build two new drydocks with length of about 220m and 180m each to cater to medium-sized vessels
(handysize and handymax class). The expansion works are expected to be completed in 2009.

BUY recommendation maintained; target price: S$1.90. We maintain our BUY recommendation on ASL with a target price of S$1.90 based on a PE of 9x FY09 earnings, which is in line with the small-mid cap offshore and marine sector average. We continue to remain positive on ASL’s prospects and are reviewing our earnings forecasts for FY09 and FY10 for upgrades given the planned shipyard capacity expansion.

[winston]

Not vested. From DBS:-

Undervalued marine play

Story: ASL is an undervalued marine services group with three core businesses in shipbuilding, ship repair and conversion, and ship chartering.

Point: We believe that ASL will see across-the-board business growth for all its three business divisions in the FY08-10 forecast periods. Its shipbuilding division will see good earnings visibility till FY11, which is backed by a record high S$750m order book, and the delivery of higher margin offshore vessels.

Using our assumptions for the percentage completion for secured projects, we
estimate that ASL’s revenue in FY08 and FY09 are 100% backed by secured orders, while >60% of our revenue projection in FY10 is backed by secured contracts.

The group has also expanded its charter fleet of barges, tugs and offshore vessels by 64% since 3 years ago to the current 175 vessels. Backed by an addition of 22 vessels over the near term and steady utilization rates of above 75%, we expect ASL to benefit from the strong regional demand.

ASL will also see its earnings growth sustained in FY10 from an expected increase in ship repair capacity of an estimated 75% by end 2009 to tap into the growing regional demand for ship repair services.

Relevance: We have forecasted recurring net profit to grow 43% and 18% in FY08 and FY09 to S$49m and S$58m, respectively. Our fair value of S$2.01 is based on an undemanding 10x fully diluted PE for its shipbuilding and charter operations and 12x on its higher margin ship repair business.

With more than 45% price upside potential to our fair value, we maintain BUY on ASL.

[winston]

Not vested. From DMG:-

ASL Marine: Twin pillars of growth (BUY\S$1.29\Target S$1.83)
Serene Lim (62323897, [email protected])

Twin pillars of sustained earnings.
We recently met the management of ASL Marine (ASL) for an update on the company’s prospects and panned out twin pillars of sustained earnings, notably from activities in the shipyard (includes newbuilding as well as repairs and conversions), and shipchartering.

Key takeaways:

1. ASL’s yards are currently running at full capacity with outstanding order book of S$750m for the construction of 50 vessels (from external customers). Moreover, ASL, which now boasts the largest graving dry dock in Batam, is able to take on more shiprepair and conversion jobs, especially those of higher value and margins.

2. ASL’s chartering business, with acurrent fleet of 176 vessels, is riding the buoyant cycle of high chartering rates from diverse industries, including the offshore oil & gas.

Robust 3Q08 results. ASL delivered a stellar set of 3Q08 results recently. Net profit surged 34.3% YoY to S$14.2m bolstered by higher revenue growth of 18.3% to S$91.7m. On the YTD basis, 9M08 net profit jumped 54.3% to S$42.1m on the back of strong revenue of S$285.1m (up 21.9%).

Exciting prospects ahead. The sustained high oil price augurs well for offshore E&P activities,
including offshore support vessels. We believe ASL has a growing market share for the construction of small-mid range AHTS/AHT. There is still a strong demand of AHTS/AHT newbuilds especially from the Middle East, even though there will be an influx of newbuilds in 2009.

Going forward, we believe ASL will shift its focus to build more of such AHTS/AHT vessels, instead of tugs and barges. As for the ship chartering division, ASL would be taking progressive delivery of 22 vessels, increasing its existing fleet to 64 tugs, 4 AHT, 1 AHTS and 128 barges by FY09.

Raising target price. In view of the 3Q08 results, we are tweaking our forecasted earnings. We have pegged our valuation parameter of 8.5x to FY08F/09F blended EPS (15% discount to peers), given ASL’s smaller market share in shipbuilding. We derive a target price of S$1.83 (from S$1.59
previously). Maintain BUY

[winston]

Not vested. From DMG:-

ASL Marine: Twin pillars of growth (BUY\S$1.29\Target S$1.83)
Serene Lim (62323897, [email protected])

Twin pillars of sustained earnings.
We recently met the management of ASL Marine (ASL) for an update on the company’s prospects and panned out twin pillars of sustained earnings, notably from activities in the shipyard (includes newbuilding as well as repairs and conversions), and shipchartering.

Key takeaways:

1. ASL’s yards are currently running at full capacity with outstanding order book of S$750m for the construction of 50 vessels (from external customers). Moreover, ASL, which now boasts the largest graving dry dock in Batam, is able to take on more shiprepair and conversion jobs, especially those of higher value and margins.

2. ASL’s chartering business, with acurrent fleet of 176 vessels, is riding the buoyant cycle of high chartering rates from diverse industries, including the offshore oil & gas.

Robust 3Q08 results. ASL delivered a stellar set of 3Q08 results recently. Net profit surged 34.3% YoY to S$14.2m bolstered by higher revenue growth of 18.3% to S$91.7m. On the YTD basis, 9M08 net profit jumped 54.3% to S$42.1m on the back of strong revenue of S$285.1m (up 21.9%).

Exciting prospects ahead. The sustained high oil price augurs well for offshore E&P activities,
including offshore support vessels. We believe ASL has a growing market share for the construction of small-mid range AHTS/AHT. There is still a strong demand of AHTS/AHT newbuilds especially from the Middle East, even though there will be an influx of newbuilds in 2009.

Going forward, we believe ASL will shift its focus to build more of such AHTS/AHT vessels, instead of tugs and barges. As for the ship chartering division, ASL would be taking progressive delivery of 22 vessels, increasing its existing fleet to 64 tugs, 4 AHT, 1 AHTS and 128 barges by FY09.

Raising target price. In view of the 3Q08 results, we are tweaking our forecasted earnings. We have pegged our valuation parameter of 8.5x to FY08F/09F blended EPS (15% discount to peers), given ASL’s smaller market share in shipbuilding. We derive a target price of S$1.83 (from S$1.59previously). Maintain BUY

[winston]

Not vested. From Kim Eng:-

1. ASL Marine (Rohan Suppiah, DID: 64321455)
Previous Day Closing price: S$1.27
Recommendation: Buy (maintained)
Target price: S$2.04 (maintained)

♦ Orderbook underpins earnings
- ASL affirms that its yards are still running at full capacity as it converts on its orderbook of $750m
- ASL expects to deliver around $200m of this orderbook each year for the next three financial years, underpinning its earnings.
- The ongoing expansion of its Batam drydock from 260m to approximately 360m, which will be
completed in 2009 also looks very timely in the current tight market.

♦ Selectivity to boost margins
- Furthermore, enquiry levels for vessel newbuilds remain high despite lead times for vessel delivery
dates being pushed out in general.
- ASL believes it can enhance returns by being more selective in the jobs that it chooses to do, opting for higher value jobs which will further improve its margins.
- ASL will look to take on larger-sized AHTS newbuilds. Other higher value-added jobs under
consideration are Diving Support Vessels (DSV).

♦ Repair forms a solid backbone; Charter rates firm
- Current shiprepair gross margins stand at over 30%, and ASL expects this to be maintained, with raw material increases able to be passed on to its customers, as well as maintaining a 6-month stockpile of steel.
- As for ship chartering, most of its contracts are currently short-term at around 3 months, which fully capitalises on the current firm charter rate environment.
- Furthermore, ASL will benefit from the addition of a further 15 vessels to its fleet over the next 3
years.

♦ JV charter rates to improve
- While ASL has already exited its lacklustre coal mining businesses in Kalimantan, ASL still has a
fleet of some 64 tugs and barges in a joint venture company that had been contracted to support
coal mining at marginally profitable rates.
- These contracts are expiring in August, and ASL should be able to at least triple the charter on these assets upon re-deployment, enhancing their returns.

♦ Valuations still very attractive
- We continue to like ASL’s prospects across all its 3 primary business divisions;
- It is still a clear beneficiary of the marine and offshore oil & gas upswing, and offers excellent value at just 0.27x PEG.
- Our target price of $2.04 is derived from a FY08 PER of 10x, 63% upside.

[winston]

Not vested. Kim Eng seems to be providing alot of visibility to this stock:-

ASL Marine (Rohan Suppiah, DID: 64321455)
Previous Day Closing price: S$1.25
Recommendation: Buy (maintained)
Target price: S$2.04 (maintained)

♦ Offloads 50%-stake in ASL energy
-
ASL Marine is selling its 50% stake in ASL Energy to its Joint Venture partner Manhattan Resources.
-
ASL Energy and its subsidiaries are principally involved in the marine transportation of coal in Indonesia. It has a fleet of 64 tugs and barges and owns and charters a floating coal terminal.
-
ASL will receive US$16.3m, or approximately $22.4m. In addition, Manhattan takes over an interest-free loan, taking the overall value of the deal to $34.9m.

♦ Net gain of $9.6m
-
ASL Marine says that the disposal will result in an estimated net gain of approximately $9.6m.
-
The disposal will enable the ASL Marine to rationalise its investment by re-deploying the sale proceeds for funding the future growth of its core shipbuilding, shiprepair and conversion businesses as well as shipchartering.
-
This transaction ends the less than fruitful relationship with Manhattan Resources, following its earlier disposal of another venture for a stake in a coal mine in Indonesia. This leaves it free to concentrate on growing its core businesses.

♦ Valuations still very attractive
-
We continue to like ASL’s prospects across all its 3 primary business divisions;
-
It is still a clear beneficiary of the marine and offshore oil & gas upswing, and offers excellent value at just 0.27x PEG.
-
Our target price of $2.04 is derived from a FY08 PER of 10x, and has a 63% upside.

[winston]

Not vested. From DBS:-

Management of ASL Marine remains positive on ship repair activities in the region, and revealed that enquiries for newbuild offshore vessels remain high among clients.

At current price levels, counter is trading at undemanding valuations of 7.4x and 6.3x FY08 and FY09 PE respectively. With earnings backed by a S$750m shipbuilding order book as of end March 2008 and a sustained demand for its ship chartering and ship repair services, we are maintaining our Buy recommendation on ASL and target price of S$2.01.

[millionairemind]

ASL enjoys 40% Q4 net earnings growth
By EMILYN YAP

SINGAPORE - ASL Marine on Wednesday reported net earnings of $18.1 million (US$12.8 million) for the fourth quarter ended June 30, a 40 per cent increase from a year ago.

Group revenue also rose 37 per cent to $115.4 million on the back of broad-based growth in all three segments of shipbuilding, shiprepair and shipchartering.

Net earnings for FY2008 stood at $60.3 million, 50 per cent higher than a year ago. Revenue for the year grew 26 per cent year-on-year to reach $400.4 million.

ASL Marine is proposing a final dividend of three cents per ordinary share and a special dividend of one cent per ordinary share.

'Despite the uncertainties of the general economy, the group is confident that prospects continue to remain positive,' said chairman and managing director, Ang Kok Tian.

[winston]

Not vested. From Kim Eng:-

ASL Marine – FY08 (YE June) Results (Rohan Suppiah 64321455)
Previous day closing price: S$1.03
Recommendation: Buy (maintained)
Target price: $1.89 (reduced from S$2.04)

Earnings in line
ASL Marine reported FY08 net profit of $60.3m, which was dead in line with our expectations. Net profit grew by 50% on the back of a 26% rise in turnover to $400.4m, with the shiprepair business posting the largest increase in turnover, up 57%. All businesses performed to expectations, with shipbuilding turnover growing by 21%, and shipchartering growing by 22%.

Margins very healthy
Margins across all segments also were healthy: shipbuilding gross margins improved from 8.4% to 10.3%, while shiprepair was up from 24.6% to 31.1%. Shipchartering saw a dip in margins from 33.8% to 29.9%, due to vessel repair and higher fuel costs, but this is expected to improve in the current year.

Selective in its jobs
ASL’s newbuilding orderbook still remains healthy at $693m, with in-demand Offshore Support Vessels representing more than half of this. Enquiry levels for vessel newbuilds still remains high. While the orderbook quantum has slipped from $750m at end-3Q08, ASL is being more selective in the jobs that it chooses to do, opting for higher value jobs, which will further improve its margins. Also, given the strong demand for shiprepair, more yard space may be devoted to this segment, rather than newbuilds, over the short term.

Prospects still outstanding
ASL remains positive about its outlook. Its shipbuilding business will benefit for continued demand for specialized vessels, especially for the offshore segment. Shiprepair will capitalise on an expected capacity crunch globally. For shipchartering, ASL is expanding its fleet by 15 vessels over the next 3 years, while contract rates remain firm.

Extremely undervalued
We continue to like ASL’s prospects across all its 3 primary business divisions; it is still a clear beneficiary of the marine and offshore oil & gas upswing. We maintain our FY09 net profit forecast of $69.0m. Our target price is adjusted to $1.89 from $2.04 to reflect current market conditions, but is still derived from an extremely conservative FY09 PER of just 8x, and implies 82% upside.