Jaya Holdings

Jaya Holdings: CIMB note that at 18% of FY13 (1H at 46%), 2Q core earnings were 38% below consensus estimates, due to losses from shipbuilding. House had expected small profits. Cut FY13-14 EPS by 3-12% and trim TP, still pegged at 1x CY13 P/BV or its 4-yr mean. Core earnings shot up 7x as 2Q reinforced house view of Jaya’s successful transition into a leading OSV charterer. The blip came from legacy shipbuilding projects. Though house had previously flagged the sales of two vessels in 2Q would yield low margins, did not expect losses. That said, our forward numbers are now driven by Jaya’s chartering performance. On this front, Jaya has delivered. Utilisation climbed to 80% (2Q11: 62%) while an average day rate of US$12,685 (up 37% yoy from US$9,228) was achieved. As a result, chartering EBITDA doubled. Lastly, Jaya flagged that 3Q could be a softer qtr due to the enforcement of Indonesia's cabotage rule and the monsoon season. However, CIMB expect a seasonally stronger 4Q to make up for the softness. IHC-Jaya cooperation gains traction The IHC-Jaya cooperation has gained traction with the launch of the Packhorse design for PSVs and subsea support vessels. An interim DPS of 0.5c was declared, signalling Jaya’s resolve to pay dividends going forward. Ratings as follow: CIMB maintains O/p with $0.88 TP