ASL Marine

ASL Marine: update following analyst yard visit. ASL added new capacity in 4Q10, with the lengthening of its existing dry dock (from 260m to 340m) and a new second medium-sized dry dock, which should allow mgt to focus on offshore and energy-related conversion works in future. Meanwhile, company recently secured new contracts worth $55m for 30 vessels, bringing net order book to $327m of which 78% is expected to be recognized in FYJun11. This compares with FY10 revenue of $468m…

ASL’s charter segment also likely to grow, as mgt intends to reflag another 20 vessels in FY11 to take advantage of Indonesia’s cabotage rules, whereby it can achieve higher avg day rates by operating in Indonesian waters vs international waters. KE maintains Buy on valuation grounds, but lowers target to $1.12 from $1.53 on prospects of higher competition and margin compression.