Jaya Holdings

Jaya Holdings: On its sale of its second AHTS vessel recently, OSK DMG reports that a key piece of information- the sale price was missing from the announcement. DMG's channel checks indicate that this vessel was sold through the exercise of an option included in the sale of the Jaya Sovereign’s sister vessel, the Jaya Supreme, which pegs the sale price at around US$73m. The sale of the latter caused Jaya to record a loss of US$1.3m, which house fear may happen again in this case. Following the sale, DMG believe that Jaya has sufficient cash to complete its shipbuilding programme. The key issue for the stock now is the lack of visible catalysts – all future incoming vessels have already been incorporated into its forecasts, and the IHC Merwede shipbuilding contracts are nowhere in sight. A potential short-term positive may be additional vessel sales, which will boost the bottomline, but at the cost of long-term earnings growth. OSK DMG maintain a SELL call with TP of $0.53.