■ Mixed bag 2Q15 as solid accommodation performance due to SSAV (Xanadu) and LCV (Endurance) offset by loss-making OSVs:
POSH reported a headline net income of US$6.1 million, down 49% y/y. However, it was a strong recovery from 1Q15, which saw nearly zero profit. On an adjusted basis (ex-asset sale gains) earnings came in at US$5.5 million. Earnings would have been stronger had there not been a US$2.7 million allowance for doubtful debt. Overall, 1H15 recurring earnings came in at US$4.3 million, which is only 15% of JPM’s FY15E earnings but do note we are 50% below consensus currently.
■ Loss making Offshore support division a key area of concern:
In spite of relatively steady revenue contributions from the OSV division (was only down 5% y/y and down 3.7% q/q), we saw OSV gross profit margins in negative territory versus 30% in 2Q14 and 12% in 1Q15. With Utilization at 79% in 2Q15 for the OSV division, we await further clarity from management on exact reasons for the loss i.e. have there been any one-off losses or costs.
■ Offshore Accommodation (OA) see solid earnings on 2 x new vessels:
With POSH Xanadu (SSAV deployed in Brazil) and POSH Endurance (LCV in SE-Asia) contributing for 2Q15, the OA division was one of the few bright spots for POSH as G.P. margins for 2Q15 (for OA) came in at 50% (1H15 at 37%) versus the JPM estimate of 34% providing upside risk. Admittedly though, we believe this is more than offset by the poor performance of HSER and OSV division and see overall earnings as unaffected.
■ Reiterate Neutral, analyst briefing later today:
Given continued uncertainty on Oil services space, we continue to reiterate Neutral recommendation on PACC Offshore
. (Read Report)
Read Related Reports
Source : JP Morgan Asia Pacific Equity Research
Labels: Offshore Marine Sector, POSH