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22-12-2012, 09:03 AM
This report is probably the first comprehensive one in a long while since Jaya's renewed focus by a new controlling shareholder.
If you have a good look into Jaya's latest annual report for FY ending Jun 12, the company has stated that they will step up their reach to the investment community. The timing of the report is significant as it is coming on the back of the emergence of the fruits of new initiatives embarked - (i) sustainability of recurrent income via raising utilisation rates of owned vessels (ii) scaling back and tailing off speculative new builds (in the final 20 months in the words of management (iii) potential new contract flows from alliance with Dutch based IHC-Merwede.
The main positives that one can look forward to are as follows:
(i) new controlling holders raising their stakes progressively from their initial 54.7% to 61.17% via a series of open mkt purchases;
(ii) appointment of experienced key personnels that is already showing key results in each of the core division - chartering and ship building/repairs. This is unlike the previous fund manager that continued with the old business model and mgt that eventually ran aground;
(iii) benefiting from the austerity imposed by banks in debt restructuring during the last few years. Now that they have successfully refinanced the old debt, Jaya has negligible net debt unlike peers Ezra and Swiber that is highly geared. The low debt levels will enable them to capture emerging opportunities and resume dividend payments.
I am personally excited by this turnaround story. Apart from the debt injunctions that resulted in the offloading of speculative buildings which resulted in a substantially stronger balance sheet, Jaya has been profitable even in the dark ages.
With a clean slate, clear business directions with experienced personnel in charged to steer towards the right directions, Jaya minorities can expect more investor friendly approaches by the company to enhance shareholders wealth. Given that Jaya is currently trading below book value, I think the first stage of rerating will be towards the book value. As the analyst community has a tendency to be fashionable, we could well be looking for similar recommendations as mgt re-iterate their renewed focus to the analysts.
Vested
If you have a good look into Jaya's latest annual report for FY ending Jun 12, the company has stated that they will step up their reach to the investment community. The timing of the report is significant as it is coming on the back of the emergence of the fruits of new initiatives embarked - (i) sustainability of recurrent income via raising utilisation rates of owned vessels (ii) scaling back and tailing off speculative new builds (in the final 20 months in the words of management (iii) potential new contract flows from alliance with Dutch based IHC-Merwede.
The main positives that one can look forward to are as follows:
(i) new controlling holders raising their stakes progressively from their initial 54.7% to 61.17% via a series of open mkt purchases;
(ii) appointment of experienced key personnels that is already showing key results in each of the core division - chartering and ship building/repairs. This is unlike the previous fund manager that continued with the old business model and mgt that eventually ran aground;
(iii) benefiting from the austerity imposed by banks in debt restructuring during the last few years. Now that they have successfully refinanced the old debt, Jaya has negligible net debt unlike peers Ezra and Swiber that is highly geared. The low debt levels will enable them to capture emerging opportunities and resume dividend payments.
I am personally excited by this turnaround story. Apart from the debt injunctions that resulted in the offloading of speculative buildings which resulted in a substantially stronger balance sheet, Jaya has been profitable even in the dark ages.
With a clean slate, clear business directions with experienced personnel in charged to steer towards the right directions, Jaya minorities can expect more investor friendly approaches by the company to enhance shareholders wealth. Given that Jaya is currently trading below book value, I think the first stage of rerating will be towards the book value. As the analyst community has a tendency to be fashionable, we could well be looking for similar recommendations as mgt re-iterate their renewed focus to the analysts.
Vested