Kim Heng Offshore & Marine announced last evening that it expects to report a greater net loss in 4Q16 and FY16 as compared to the net loss recorded in the corresponding periods of the previous year.

This is not a surprise to us as we had previously forecasted a net loss of S$5m for FY16 due to the poor operating environment, though we now feel there is further downside risk since the company updated that there will be an impairment in the group’s PPE in 4Q16.

Notwithstanding this, Kim Heng expects to report positive net total assets, positive net current assets and cash and cash equivalents of ~S$20m as at 4Q16. Recall that cash and cash equivalents was S$23.3m in 3Q16.

As the group’s FY16 results may be out next week, we put our hold rating and fair value estimate of S$0.089 under review.

Source: OCBC Research - 17 Feb 2017