Jaya Holdings

Jaya Holdings: CIMB has an unrated but positive note on the Co. Note that rumors that Dutch shipbuilder IHC Merwede could take over Jaya have been laid to rest after both parties signed a wide-ranging agreement that enables IHC’s vessels to be produced by Jaya’s yards. With clarity over its strategic direction, CIMB believe that the stock could rerate on steady chartering contributions flowing through; (ii) new shipbuilding orders as a result of the collaboration; and (iii) refinancing of its schemes of arrangement. Jaya is exploring refinancing for its schemes of arrangement as it eyes a possible resumption of div payments. Historically, Jaya has been well-received for its generous div, paying out 60-70% of its earnings. Further, the group has built up a strong cash position of US$201m. Conclude that what sets Jaya apart from the other turnaround stories in the market is: (i)s operations that have always been operationally sound; and (ii) the group’s clear roadmap and set of performance indicators for investors to track. At this level, downside is limited and investors are able to ride on the coat-tails of smart money as the financial investors push through their initiatives.