• Growth in a tough environment
• Wins US$100m new orders
• US$564m net order book

Commendable FY15 earnings growth

Triyards Holdings reported an 81% YoY rise in revenue to US$88.4m and a 59% increase in net profit to US$8.4m in 4QFY15, such that our full year net profit forecast of US$27.2m (+2%) was spot on. The street was going for US$25.95m PATMI. The fact that the group achieved growth, albeit marginal, in an environment in which other offshore marine peers are seeing significant declines in earnings, is commendable. This was also not at the expense of its balance sheet – net gearing fell from 0.5x in FY14 to 0.3x in FY15. Gross profit margin remained healthy at 21.8%, compared to 3QFY15’s 22.1% and 4QFY14’s 27.0%.

US$550m wins since Jan 2015

The group also announced new order wins of US$100m comprising three chemical tankers, two high speed craft and an industrial fabrication contract. The chemical tankers will be built for ship-owner Swiss-Canadian Maritime and managed by ABC Maritime A.G. Since Jan this year, new order wins have totaled US$550m, providing earnings visibility to FY17. In comparison, CY2014 saw new orders of US$170m.

US$564m net order book relatively diversified

Triyards’s net order book currently stands at about US$564m, which comprises nine liftboats and a good mix of other kinds of products such as fast craft vessels and chemical tankers. We view this favourably, as the liftboat is still a relatively bright spot in the current tough environment, while the other products are not dependent on the oil and gas industry. Looking ahead, Triyards expects to spend ~US$20m on capex. Spare capacity in its three Vietnam facilities range from 30-35%, and the group has also utilized neighbouring yards for certain work during peak seasons. Meanwhile, a S$0.01/share final dividend has been declared, same as FY14. Rolling forward our valuation, our fair value estimate rises slightly from S$0.60 to S$0.61, based on 5x FY16 earnings. Maintain BUY.

Source: OCBC Research - 21 Oct 2015