Jaya Holdings

Jaya Holdings: 2QFY14 net profit fell 11% to US$7.3m although topline dropped 70% to US$33m, as Offshore Engineering Services contributed close to nil revenue this quarter, versus US$83.3m a year ago. Excluding this, revenue was 31% higher at US$33m, on improved charter utilisation of 83% (2QFY14: 80%) Bottomline was lifted due to a 57% drop of other operating expenses to $0.5m. Excluding the one-time charges and gains from vessel sales, net profit for 2Q FY2014 was 16.8% higher at $6.9m. Order book as at 17 Jan was robust at US$327m (+82% y/y), while Jaya’s charter fleet has 28 vessels with a young average age of 3.9 years. Jaya expects 2 sales/disposals this quarter for a 16,000 bhp AHTS and a 5,000 bhp AHTS. Total estimated gain from these are ~US$3m On recent share price hike due to speculation of a potential takeover or change in major shareholders, CIMB asks what makes Jaya a good takeover target and highlights Jaya’s steady, recurring earnings, on top of a young fleet and a 3 year chartering EBITDA CAGR of 16%. The house also likes its net-cash, strong cash-generative company with a good fleet mix and attractive valuations Interim dividend of 1¢/share was declared. At NAV of 69.14 US¢, the stock trades at about 0.9x P/B. CIMB has an Add rating with TP $0.92