Triyards

Triyards: UOB Kay Hian initiates Coverage with Buy call and $1.11 TP. HOuse note that Triyards is a proxy to the growing acceptance ofliftboats internationally, being one of the few yards outside the US capable ofbuilding such vessels. Forecast 3-year core net profit CAGR (FY12-15F)of 19%, excluding lumpy profit contribution from Ezra’s deepwater multi-layconstruction vessel Lewek Constellation. Add that Triyards is a proxy to the growing acceptance of liftboats internationally, being one of the few yards outside the US capable of building such vessels. Believe the market in Southeast Asia, the Middle East and West Africa will be able to absorb 30-50 additional liftboats over the next 2-3 years, given that the ratio of liftboats to platforms in these regions is still relatively low at 1:106, compared with 1:26 in the GoM. Triyards will embark on further growth by: a)developing proprietary third-generation liftboat designs, b) expandingship repair capacity, c) diversifying into new products such as highspeedaluminium commercial and patrol vessels, and d) growing itsequipment business and branding.