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Analyst Nicholas Yon of Lim and Tan Securities has initiated “buy” on integrated marine subsea operations company, Mermaid Maritime DU4 7.89% (MMT), at a target price of 30 cents.
Yon’s target price is based on 12.5 times FY2024 price-to-equity ratio (P/E) and is pegged to a 15% discount to its peers.
He writes in his July 3 report: “MMT boasts one of the world’s largest dive support vessels (DSV) fleets and is a turnaround company strategically positioned to capitalise on the rising demand for decommissioning and inspection, repair, and maintenance (IRM) projects amidst higher oil prices and global sustainability initiatives.”
He adds: “With high operating leverage due to their big fleet size amidst an industry upcycle, MMT has hit critical mass, and we expect further increases in revenue to significantly contribute to their bottom line.”
For the FY2024 and FY2025, Yon writes that the market has not “fully acknowledged” MMT’s robust momentum in securing orders, which promises significantly increased revenue and profit visibility.
Furthermore, the analyst notes that the downturn in the oil and gas industry for the past seven years has eliminated several of MMT’s competitors. This, coupled with it having “one of the largest and skilled dive teams”, enables the company to secure delayed projects which are only resurfacing now.
“Due to the scarcity of DSV vessels and elevated charter prices, MMT can now have pricing power,” writes Yon.
The cessation of production of numerous oil wells in the next decade across the Asia Pacific (APAC) and Thailand also allows MMT to be a prime beneficiary of the expected increase in decommissioning orders.
As projects in the industry tend to have a short life span, excluding further contract wins, MMT will have a 60% to 65% current order book recognised in FY2024.
“Despite more than doubling its order book in six months from US337 million ($457 million) in 1HFY2023 to US734 million, MMT has continued to secure multiple contracts across Southeast Asia (SEA), the Middle East and Africa to replenish its order book. We expect MMT’s win momentum to continue and the order book to cross $1 billion, giving further visibility beyond FY2024,” writes Yon.
Meanwhile, the company also stands to benefit from its extensive fleet as charter rates continue to soar.
You notes: “Charter rates are now near 2008’s high, and any rate increase above MMT’s cost structure directly feeds into MMT’s bottom line. Older contracts entered before FY2023 should also expire soon, and any new agreements made should reflect the higher charter rates seen in today’s market.”
Despite the spike in share price, MMT’s valuations continue to be “undemanding”, trading at eight times forward P/E.
The analyst concludes: “Given our expected net profit of US25 million for FY2024, we value MMT at 12.5 times price-to-equity ratio (P/E) by applying a 15% discount to peer estimates P/E of 14.7 times due to its small-cap nature.”
You is also hopeful of a “possible dividend surprise”, which can be well supported by MMT’s current operating cash flow.
Risks noted by him include the cyclical nature of the oil and gas sector, a decline in oil prices which would impact oil majors’ decision to spend, thus limiting MMT’s order books, and lastly, the possible need for a cash call, which will be essential as MMT plans to expand its operations and undertake larger projects.
As at 4.33 pm, shares in Mermaid Maritime are trading 1.5 cents higher or 7.90% up at 21 cents.
Maybank Securities’ Jarick Seet has maintained his “buy” call and 46 cents target price on Dyna-Mac Holdings NO4 4.05% after Korean shipbuilder Hanwha Group emerged as a new substantial shareholder, taking over from Keppel.
Keppel, having exited the offshore and marine business, has been expected to gradually divest its remaining assets in this industry deemed non-core, including Dyna-Mac.
On May 10, Keppel, which first invested in Dyna-Mac back in 2011 for 35 cents each, sold its stake of 23.9% stake for $100 million, which is at a premium of 10% over last Friday’s market price.
“We believe this is a key positive as it removes an overhang, as Keppel had already stated its intentions to sell all its non-core assets,” says Seet.
Hanwha Ocean provides one-stop solutions for top and bottom structures, including FPSO, which is in the same business as Dyna-Mac.
Seet believes that Hanwha and Dyna-Mac could form partnerships and create synergies that both parties could benefit from in the booming FPSO space.
“Hanwha Ocean’s investment also represents firm confirmation by one of the industry’s largest players of Dyna-Mac’s value and potential,” he adds.
Dyna-Mac’s order book now stands at around $896 million, with deliveries stretching to 2026.
The company’s share price has gained 27.6% year to date and Seet expects that despite so, Dyna-Mac will continue to benefit from the strong demand for FPSO and continue to re-rate as it executes its larger-size contracts and achieves higher profitability.
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Vividthree launched its revolutionary OTT comic video platform on both Google Play store (Android) and App store (iOS) since December 2019, has raked in commendable statistics. Across top-trending comic apps, ComicVid held its own against the top-trending comic apps with 3rd ranking under the ‘Comic’ category on Google Play store. In the List of Top Free Comic Apps on Google Play store, ComicVid app has set a record of being top 10 comic app along with 10,000+ downloads on both Google Play store and iOS App store after its successful launch. This achievement adds another star on the shoulder of Vividthree’s innovation.
• Revenue rose 62% Y-O-Y on maiden contribution from newly acquired subsidiary, Dongming Qianhai at end 2018
• Net Profit surged 67% Y-O-Y to RMB 138 million
Sinostar PEC Holdings Limited (SGX: C9Q), one of the largest producers and suppliers of downstream petrochemical products within the Shandong Dongming Petrochemical Industrial Zone, today announced its financial results for the full year ended 31 December 2019 (“2019”), with a 67% Y-O-Y surge in net profit.
Mr Zhang Liucheng, Chief Executive Officer and Executive Director of Sinostar PEC, commented, “This set of results showed the contribution from Dongming Qianhai, which doubled our propylene production capacity and broadened our product offerings. Despite a periodical production plant maintenance, which temporarily stopped production, we managed to record a set of commendable results. We begin the new year on a cautious note, monitoring the COVID-19 outbreak situation closely while remaining confident in our long-term growth outlook.”
UnUsUaL Limited (SGX: 1D1), today announced its financial results for the third quarter ended 31 December 2019 (“3Q FY2020”).
The Group intends to continue with quarterly reporting for the full financial year ending 31 March 2020.
Commenting on the Group’s 3Q FY2020 results, Chief Executive Officer of UnUsUaL, Mr Leslie Ong said, “The Group’s performance in 3Q FY2020 was very commendable with a good offering of concerts and family entertainment shows. The effects of the recent COVID-19 are broad-based and will have an impact on our current quarter and full year’s performance. UnUsUaL and our management team have put in place plans to address such threats to the Group’s promotion and production businesses. We have been taking steps to diversify into new markets to better manage and reduce the impact of such threats to the Group’s performance, and remain positive of the Group’s long-term business prospects.”
- Net profit attributable to shareholders increased to S$1.6 million in HY2020 compared to S$0.5 million in HY2019
- The Group recently completed the acquisition of Jaga-Me in January 2020, which will strengthen its digital technology capabilities
Alliance Healthcare Group Limited (SGX: MIJ), an integrated healthcare group leveraging the use of technology to provide an extensive suite of healthcare services primarily in Singapore, has announced its unaudited consolidated financial results for the half year ended 31 December 2019 (“HY2020”).
Executive Chairman and CEO of Alliance Healthcare, Dr Barry Thng Lip Mong (唐立茂) commented, “We are encouraged by the progress made since the Company’s listing on the Catalist board in May 2019. We are committed for Alliance to win through continuous innovation and excellent execution. We will continue to deliver seamless quality healthcare to the patients, providing differentiated and cost-effective healthcare solutions for various medical needs, such as hospitalization, critical illness care, and chronic care. We remain confident of our long-term prospects and will stay vigilant during this COVID19 period to offset any headwinds.”
Vividthree Holdings Ltd. (SGX: OMK), is pleased to announce that it has entered into a binding term sheet with Darkbox Studios Pte Ltd (“Darkbox”) for the proposed acquisition of all intellectual property (“IP”) rights, all published and unpublished works for the popular comic IP, “Silent Horror” owned by Darkbox and both Mr Goh Chun Hoong and Mr Goh Chun Keong (collectively, the “Vendors” and each a “Vendor”); as well as all rights and goodwill to the business name “Darkbox” and “Darkbox Studio” from the Vendors (“Proposed Transaction”).
Managing Director of Vividthree, Mr Charles Yeo commented, “The acquisition of the rights to Silent Horror is a potential game-changer for us. This comic title, which garnered over 92 million views online, is a testament to the quality of the IP. By tapping on our post-production and content production capabilities, we want to bring ‘Silent Horror’ to an even wider audience via our OTT comic video platform. Moving forth, we will continue to strengthen our competitive edge to meet the increasing consumer demand in the region.”