Strong rise.
MAYBULK’s share price has rallied 11% since 26 Dec 2012 and closed at RM1.43 on
Tuesday. We believe this could be mainly due to MAYBULK’s intention to inject
additional capital into PACC Offshore Services Holdings Pte Ltd (POSH). On 16
Nov 2012, MAYBULK announced that the group had proposed to subscribe for 7.96m
units of POSH’s redeemable convertible preference shares at an issue price of USD4.00
per each rights share totalling USD31.9m
(~RM100.0m). However, MAYBULK’s 21% stake in POSH will remain unchanged after the
said subscription.
FY12 earnings
supported by POSH. MAYBULK recorded
a lower 9M12 net profit of RM48.9m, which was a 35% decline from the RM74.9m in
9M11. The poor bottom line performance was due solely to the the drop in the
hire rates for its dry bulk and tanker fleet. However, MAYBULK’s associate
company, POSH posted higher profit contribution of RM21.5m in 9M12 (from RM8.0m
previously) due to a better operating results. POSH was incorporated in
Singapore and its principal activity is in providing Oil & Gas offshore
marine support services.
Consensus estimates.
The consensus is forecasting a FY13 net profit of RM42.0m, implying an EPS of
4.1 sen. We believe the forecast is justified
although it is a drop of 22% from FY12 earnings of RM54.0m as FY13 will
continue to remain a challenging year for the shipping industry on the back of
depressing freight rates. However, the potential earnings catalyst for the
group is a recovery of the OSV sector in FY13, where POSH is involved in.
Revised dividend
payout. Despite not having a formal
dividend policy, MAYBULK has consistently paid out dividends since FY04 (45% on
average), with a 33% payout for its latest full FY11 year. Based on a lower 30%
dividend payout assumption, we are estimating a NDPS of 1.2 sen for FY13,
implying a dividend yield of 0.8%.
Fully valued for now.
The stock is trading at around 34.6x PER on its 4.1 sen FY13 EPS, which is
already fairly demanding in our view.
SWOT ANALYSIS
Strengths: Strong
connection with Kuok Group’s network.
Weakness: Heavy
influx of newbuildings deliveries.
Opportunity:
Involved in Oil & Gas services via its 21% stake in PACC Offshore Services
Holdings Pte Ltd (POSH).
Threats:
Lower-than-expected freight rates.
TECHNICALS
Resistance:
RM0.69 (R1), RM0.74 (R2)
Support: RM0.65
(S1), RM0.57 (S2)
Comments: Just
last week, MAYBULK broke above the downtrend resistance at RM1.34. The share
price has also intersected the 20-, 50- and 100-day SMAs, which suggest that a
bullish trend reversal may be on the cards. Nevertheless, traders should wait
for a further breakout above the RM1.48 key resistance before buying into the stock.
BUSINESS OVERVIEW
MAYBULK was incorporated in 1988 and subsequently, it became
the chartering arm for Kuok Group. Presently, MAYBULK is one of the largest
drybulk shipowners in Malaysia involved in international shipping. MAYBULK owns
and operates a fleet of vessels which includes dry bulk carriers and product
tankers.
CORE BUSINESS
SEGMENTS
Bulk Carriers. The Group's bulk carriers are engaged in the transportation
of dry cargoes comprising major bulks such as iron ore, coal (steaming and
coking coals), grains and minor bulks like sugar, coke, fertilisers, among
others. Apart from its own vessels, MAYBULK also charters-in third party
vessels to meet the expectation of affreightment commitments.
Tankers. The tanker division operates a fleet of
modern double hull tankers which comply with the International Maritime
Organisation’s (IMO) requirements. The tankers are operating primarily in
seaborne transportation of clean petroleum products, chemicals and vegetable oils.
Ship Management. Through its wholly-owned subsidiary, MAYBULK’s
ship management involves marine operations, technical management of vessels,
ship supplies and crewing.
Source: Kenanga
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