Jaya

Jaya: 4QFY13 results surprised with a net US$16.6m one-off gain, without which core earnings of US$29.4m were exactly in line with DMG's US$29.3m forecast. Revenue was strong at US$29.8m on the back of an exceptionally-high 91% utilisation rate of its vessels. However, there were one-off gains and expenses of US$20.6m and US$4.1m respectively. Stripping these out, Jaya's profit before the tax credit would have been only US$7.5m compared to the US$24.8m figure reported. The other positive surprise was the dividend - the final 3.5 cents' dividend represents 85% of FY13's core earnings. DMG sees a striking parallel with Vard in 2011-12 when the controlling shareholder milked the asset for dividends. Going forward, recurring earnings should be able to sustain this level of dividends while the controlling funds look for an exit strategy. Jaya stock has fallen 14% since DMG's initiation three months ago, now having priced in the weak 3Q and the vessel delivery delays the house had anticipated. DMG's SELL rating and TP are currently UNDER REVIEW.