Pacific Radiance: OSV activities are recovering on more stable oil prices but E&P spending cuts are hampering a strong rebound. There is also 0 utilization for DSV segment in 2Q15.
Pacific Radiance is talking delivery of 6 vessels in 2H15 instead of 8, which is in response to the low tender activity for OSV vessels. The deferring of some vessel deliveries is part of their cost-reduction measures.
UOB Kay Hian expects 2Q15 to be the worst quarter and cuts their 2015-17 net profit forecasts by 75%, 17% and 5% respectively. Forward P/B valuations are at a cyclical trough. The house maintains its BUY rating and reduces TP to $0.95 from $0.99. Given Pacific Radiance’s experienced management, low fleet cost and its positioning predominantly in shallow-water production, the house expects it to ride through the current stormy environment. Share price catalysts include rebound in oil prices and recovery in quarterly earnings amid the industry downturn.
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