Jaya Holdings

Jaya Holdings: Grp announced strong set of 1Q11 Results, with Rev at $78.2m, +94%YoY, while Net Profit at $31.3m was flat YoY and QoQ, but above consensus estimates of $9.7m. Grp attributed strong performance to its shipbuilding Division, with Rev +224%YoY as grp sold 3 vessels at 100% revenue recognition. Offshore Shipping Division however continued to record lower rev, -17%YoY due to lower fleet utilisation, as grp increases fleet size to 30 vs 21 vessels YoY....

Grp expects Ship Chartering market to remain weak as new vessels come online, while Sales and purchase activities for completed vessels remain active, however caution that build-to-order activities continue to remain muted as market continues to absorb deliveries made in prior years...

We note that at current prices, grp trades at undemanding valuations of 1.1xP/B, vs peers average of 1.5x and grp’s historical mean of 1.9x, while grp balance sheet remains strong after its debt restructuring program with net gearing ratio improving to 0.2 from 0.3 and majority of debt repayment due in 2014-15. Grp has often been touted as a potential takeover target by analysts.