Mermaid Maritime

Mermaid Maritime: Record breaking FY14 results in line with street expectations, as net profit surged 187% to US$45.2m, mainly boosted by contribution from 33%-owned Asia Offshore Drilling, which commenced operations of two additional new jackup rigs for Saudi Aramco for 3+1 years starting mid-2013 at lucrative dayrates of US$180k/day. Meanwhile, top line improved 16% to US$313m, buoyed by subsea (+11%) and drilling (+18%) segments, primarily due to healthy project growth at Saudi Aramco, the Middle East region and in Indonesia, and increased utilisation for its drilling business. Its subsea order book stood at US$470m, which will be executed over FY15-16. The group's longer-term growth catalyst would come from the delivery and utilisation of new assets (two tender rigs and a DSV), to be delivered in 2016 and expected to further scale up operations. Maybank-KE reckons that Mermaid’s exposure to shallow water and production phases provide some insulation against oil price volatility. House notes that it had to charter in three more vessels to fulfil short-term subsea contracts recently, a sign that demand for its services remain unabated. Management proposed final DPS of US$0.0047, with the intention of a further dividend up to US$0.003/share, upon receiving income from associate. Maybank-KE maintains Buy rating with TP of $0.42.