Otto Marine's 1Q10 net profit jumped by 274% YoY to $24.5m, largely due to significant recognition of shipbuilding order to its revenue. While 1Q may be an exceptional quarter, we believe that its higher-margin Chartering and Geophysical businesses would propel OM for the next leg of growth. We have tweaked our FY10 forecast to take into account the S$9m provision in relation to possible cancellation of one vessel.
Further, FY11-12 estimates have also been adjusted due to the timing differences in the confirmation of new charter contracts. Our new target price is $0.58, premised on SOTP valuation method.
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