Pacific Radiance

Pacific Radiance: Daiwa initiates coverage with Buy call and TP $1.30. View PACRA as a value stock offering good earningsgrowth visibility, and forecast an EPS CAGR of 26% over the next three years, driven by the company’s aggressive fleet expansion programme (with an aim to almost double its core offshore vessel fleet to 100 vessels by 2019). Share price fell about 29% from its peak of $1.51 reached in mid-August this year, on back of the sharp oil price retreat, and the house see a good entry point now. The recent purchase by Executive Chairman of 5.3m shares at prices of $1.04-1.15 signals management’s confidence and supports the house investment thesis. Other catalysts would include successful penetaryion into high growth markets across Asia, improving margins on an enhanced vessel mix and its entry into the new ship repair and maintenance by 2016.