Pacific Radiance: 3Q15 results missed expectations as net profit tanked 87% y/y to US$1.7m, bringing 9M15 earnings to US$6.5m (-90%), which is 43% of the street's full year estimate.
For the quarter, revenue tumbled 29% to US$33.8m, due to lower utilisation of subsea and support vessels amid softer market conditions. The weak performance led to a a 2ppt slippage in gross margin to 21%.
Bottom line was also weighed by FX loss of US$2m, decline in gain on vessel sales of US$6.5m (-44%), and higher finance costs of US$3.2m (+43%).
Net gearing increased slightly to 81.7% (+1.7ppt q/q).
Market conditions are expected to stay depressed for the O&G sector over the next few quarters but management remains optimistic of its longer term prospects.
At the current price, Pacific Radiance is trading at a FY15e P/E of 23x and 0.45x P/B.
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