• Continues to execute
• Wins US$175m new orders
• US$520m net order book

Uneventful quarter

Triyards Holdings reported a 16% YoY rise in revenue to US$63.9m but saw a 14% drop in net profit to US$5.4m in 3QFY15, such that 9MFY15 net profit of US$18.7m accounted for close to 70% of our full year estimate, slightly below expectations. This compares to 60% of consensus’s estimates. Despite this, we are keeping our estimates intact as we expect 4QFY15 to be stronger, as certain projects reach an inflection stage in terms of revenue recognition. Gross profit margin remained healthy at 22.1% in 3QFY15 vs 22.4% in 2QFY15 and 22.6% in 3QFY14.

Clinches US$175m of new orders; YTD wins US$450m

Following new order wins that were announced in Jan, Mar and Apr this year, the group announced yesterday new contracts worth about US$175m comprising two enhanced BH450 series liftboats. The contract excludes owner furnished equipment; we estimate that each unit would cost about US$95m vs US$87.5m if the equipment were included. This brings new order wins since the start of this year to US$450m vs. US$170m for CY14.

Proposed issuance of warrants to Ezion to proceed

The client of the two liftboats was not disclosed, but we understand that it is SE-Asian based, and could have been introduced by Ezion. Do note that there was a separate announcement saying that the proposed issuance of 29.5m warrants to Ezion will proceed, as the exercise conditions have been fulfilled (one of the conditions stipulated that Ezion or another company introduced by Ezion had to bring in work worth at least US$150m within a certain time frame). The warrants will expire on 6 Jul 2018.

Net order book of US$520m

Including the backlog of Strategic Marine (~US$50m), the group’s net order book stood at about US$520m currently, providing earnings visibility for the company. Looking ahead, Triyards believes there will be continued demand for its offering, as its main business focuses on fabricating assets involved in construction, production and decommissioning, to inspection and maintenance of infrastructure for existing oil fields. Net gearing was low at 0.3x in 3QFY15. Maintain BUY with S$0.60 fair value estimate (based on 5x blended FY15/16 EPS) on Triyards.

Source: OCBC Research - 8 Jul 2015