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27-04-2017, 04:56 AM
Analyst report from KGI on Samudera on 26 April 2017.
Vested.
Quote:Samudera declared a 0.5 SG cents dividend vs our forecast of 0.3 SG cents for
FY16. FY16 core net earnings came in within expectations while it is proposing
a share buyback mandate and vessels disposal at its upcoming AGM/EGM on
April 27. We view these moves as positive and raise our TP to 26 SG cents, a 38%
upside to its current share price. We believe that Samudera’s strong balance
sheet (near net cash by Dec-17) may present it ample opportunities to ride the
upside as the macro outlook improves and freight rates stabilise.
Well positioned to take advantage of recovery; maintain BUY. We believe
Samudera’s strong balance sheet and healthy cash flow generation places it in a
good position to benefit from the opportunities in the region (e.g., LNG projects,
chartering in vessels at lower costs while freight rates recover). We also see
earnings at trough levels in FY16 and expect it to recover from FY17 onwards. As
a result, we maintain Samudera with a BUY and a TP of 26 SG Cents, pegged to
0.4x P/B (10-year historical P/B average).
Proposed share buyback and vessel disposal mandate. Samudera is planning to
dispose a total of six vessels (four container vessels, two oil tankers). Four of the
six vessels were loss making in FY16, and the disposal would help improve
earnings by around 5%. We expect the vessels to be sold at book values with no
negative impact on NTA. Samudera aims to gradually sell/scrap its Indonesian
flagged vessels and focus on its international routes from and to Indonesia. To
ride on future Indonesian growth, it will instead take a minority stake in an
Indonesian company which provides domestic shipping services.
The last share buyback that Samudera did was in May 2009; the recently
proposed share buyback mandate would allow it to buy back a maximum of 10%
of the issued shares. Samudera is also expected to release first quarter results
on this date (based on last year’s announcement), which we believe may
surprise on the upside given that freight rates (Figure 2) have stabilised in 1Q17.
Positive signs on the macro outlook. The IMF raised its global growth forecasts
from 3.1% in 2016 to 3.5% for 2017, the first since 2007 that it has lifted
expectations. Meanwhile, global trade tensions have eased as fear of trade wars
(specifically between China and the U.S.) have not materialised.
Key Risks: Oversupply in container vessels or a drop in global trade due to
increased protectionism may negatively affect shipping rates.
https://www.nextinsight.net/story-archiv...april-2017
Vested.
Can't see anything of the sort, equity stays flat.