Stellar earnings await PACC Offshore in FY15: OCBC

Demand for offshore vessels is booming.

There are good things in store for PACC Offshore in FY15. After raising US$351m in Singapore’s largest IPO in 1H14, analysts say that the company is going to reap benefits from strong industry fundamentals, particularly the increasing interest in deep-water oil exploration.

According to OCBC Investment Research, PACC has a strong competitive positioning as the largest Asia-based operator of offshore support vessels (OSVs).

“Infield believes demand and supply fundamentals are sufficient to support higher oil prices in the long-term. We believe this will encourage continued capex on exploration and production activities, especially in deeper waters. Offshore capex is projected to increase at a 10.5% CAGR from 2013 to 2017, based on Infield’s estimates. Correspondingly, we expect this to boost demand for offshore support vessels. In a bid to take advantage of the buoyant industry trends, POSH has put in place orders for 19 new vessels (as of 30 Jun 2014), with deliveries expected from 3Q14 to 1Q16. In our view, this new fleet will provide additional depth and breadth to POSH’s offshore offerings,” the report noted.