• US$18.4m net loss in 1Q
• Fairly valued
• Privatisation a possibility

Still in a Loss

PACC Offshore Services Holdings (POSH) reported a 42% YoY fall in revenue to US$34.3m and a net loss of US$18.4m in 1Q17, vs. net profit of US$4.5m in 1Q16. There were insignificant one-off items in the quarter. Most of the drop in revenue came from the offshore accommodation segment (-65% YoY to US$10m in 1Q17) as the SSAV POSH Xanadu completed its extended charter in Mar 2017 on reduced charter rate and two of the light construction vessels were not deployed in the quarter. As at 31 Mar 2017, POSH had undrawn bank lines of about US$274.1m vs. US$282.9m on 31 Dec 2016. Net gearing was 1.05x as at end Mar.

Fleet and Operational Updates

Out of the two LCVs that were idle in 1Q17, we understand that one of them commenced work in late Apr and will be working for about six months, while the other is still looking for work. As for the group’s remaining two LCVs, one will be going to Africa in mid May, while the last one is working in Thailand till the end of this year. As for the group’s SSAVs, POSH Xanadu is currently bidding for work while POSH Arcadia is currently working in Indonesia till Jun.

Work for Shell Prelude will start for POSH Arcadia roughly in Jul, for at least 100 days. After a relatively quiet 1Q17, the group’s JV POSH Terasea is also expected to ramp up in 2Q17 and remain busy for the rest of the year, with work scheduled for the INPEX Ichthys CPF and FPSO, the Shell Prelude FLNG platform, as well as Egina FPSO unit.

As of 1Q17, the group had four vessels which commenced charter with an oil major in the Middle East and the remaining eight vessels will be deployed progressively in the next three quarters of FY17. In total it has 10 vessels under construction, of which US$75.4m in capex are outstanding.

Maintain HOLD

Maintain HOLD with S$0.335 fair value estimate (based on 0.7x blended FY17/18F book). With the current privatisation theme in the market, there is also the possibility of privatization by main shareholder, Kuok Group.

Source: OCBC Research - 9 May 2017