CH Offshore

CH Offshore: Business Times today highlights the co as a value play, with the following qualities – cash-rich, low P/E, solid earnings track record, dividend payout of >7%, a solid business, zero gearing, and trading at a significant discount to book value. CH Offshore, which has a fleet of fully paid-up and young anchor handling tug supply (AHTS) vessels, is 24% owned by Chuan Hup and 27% controlled by Falcon Energy. The latter bought its stake from Msia’s Scomi Marine in Feb ‘10 for 70cts/sh, a 40% premium above the current price. At half-time last Dec, the co made ~US$14m and is expected to rake in US$30-35m for the full year. DBSV said this earnings momentum will be sustained for several more years amid strong O&M activity, and steady recovery day rates for CH Offshore's AHTS vessels. DBSV also noted the co’s US$36.3m, and reckons it will rise to US$86.5m by end-FY12 and US$108.2m by FY13, driven by a vessel disposal, strong operating cash flows and no major capex plans. This was reiterated by CIMB, which noted the net cash translates to 16% of its market cap; expects CH Offshore to add >US$35m EBITDA pa for the next 3 years, coming from strong cashflow from its fully paid-up young fleet of 15 AHTS vessels (5,400 BHP to 12,340 BHP, avg age 5-6 years).Tips CH Offshore as an attractive takeover target for players who want exposure to the AHTS market. Says the co is "cheap enough at these levels” with 50% upside. Both houses also noted that the stock was trading at a significant discount to its RNAV of some 60 cts. The stock is +5.3% at $0.495.