PACC Offshore

PACC Offshore: 4Q14 results were below estimates, with net loss coming in at US$10.0m versus 4Q13’s net profit of $4.2m, taking FY14 net profit to $53.2m (-27%).


Revenue for the quarter inched up 1% to US$55.8m, supported by the offshore supply vessels (+11%) and harbour services and emergency response (+68%) segments, but offset by lower revenue from the transportation & installation (-43%) and offshore accommodation (-4%) segments.


Gross margin fell 10ppt to 12%, dragged by the OSV and T&I shallow water segments, which was impacted by vessels undergoing repairs and lower charter rates respectively.


Bottom-line was weighed by a more than 88% decline in other operating income to US$1.8m, due to the absence of sale of vessels from the previous year, offset partially by lower general and admin (-27% to US$8.5m) and finance costs (-35% to US$2.3m).


Going forward, Maybank-KE highlights that two key concerns remain unresolved: 1) Mexico JV still making losses as vessels idle and 2) Uncontracted second SSAV, POSH Arcadia (mid-2015 delivery), which is aiming for a Petrobras charter.

The house sees greater uncertainties on deteriorating conditions in Mexico and Brazil - Pemex has announced an 11.5% budget cut while Petrobras is engulfed in corruption probe on top of the weak oil price environment. In its statements, management said that it will also seek jobs outside of Mexico and trim operating expenses.

PACC also added that it will defer some of its planned newbuildings, and has US$250m of committed capex as at end-FY14, of which US$130m is to be paid in FY15. The house believe that this is prudent as cash conservation would be vital now, even though the Kuok group offers a strong financial backing

DPS of 1.5¢ declared (FY13: 4.5¢), taking FY14 yield to 2.8%.

At the current price, PACC trades at just 0.6x P/B.