Triyards

Triyards: Released FY13 results which were ahead of forecasts. Net profit of US$31.4m (-29%). however, contract wins, estimated at US$150m for FY13, were below forecast. Contract wins are typically lumpy and Triyard has a good chance of securing some sizeable contracts in FY14. These include a liftboat contract and a maiden drilling SEU order. FY13’s lower turnover and earnings were primarily due to lower revenue recognition from the construction of the subsea construction vessel Lewek Constellation. Construction of the vessel peaked during 2H12. At of end-FY13, the Lewek Constellation was in the preparatory stage of sea trial. The lower shipbuilding revenue contribution from this vessel was partially offset by revenue from selfelevating unit (SEU) projects that started construction in 1HFY13. Gross profit margin increased from 17% in FY12 to 18% in FY13, mainly due to: a) certain SEUs that commenced construction in FY13 achieved a higher profit margin, b) additional work was performed on one offshore support vessel (OSV) project, and c) completion of three shiprepair projects as well as two offshore fabrication projects. UOB Kay Hian maintains BUY, but target price is lowered from $1.11 to $0.87. House change valuation methodology from PE to P/B. Now set target price at FY14F P/B of 1.2x, which is at a 30% discount to the longterm 1-year forward P/B mean of 1.7x for the OSV-shipyard segment of the offshore & marine sector.