CH Offshore: 2QFY16 net profit plunged 80.8% y/y to US$1m, while revenue fell 36.5% to US$5.6m, as a vessel was off-hired for mandatory overhaul and another two vessels only managed to secure intermittent spot jobs.
Gross margin fell 23.8ppt to 40.6% due to increased depreciation of a new vessel.
Administrative expenses were relatively steady (US$1.2m, -2.7%), although at the associate level, share of losses (US$12,000) were recognised, reversing US$1m share of profit last year, due to lower utilization and charter rates.
CH Offshore has zero debt, and US$6.8m of cash.
Outlook remains challenging, as increasing number of available vessels pursue fewer opportunities, resulting in plunging day rates. Management expects the low oil price environment to extend into 2016, and potentially beyond. It will also continue to decrease operating and overhead costs and focus on maintaining and gaining fleet utilisation.
On a trailing basis, CH Offshore trades at 2.95x P/E. However, valuations quickly jump to 19.2x on an annualized 2QFY16 basis to underscore the sharp downturn in business environment. The stock is also trading around book. 2.5¢ dividend announced (nil in last corresponding period).
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