ASL Marine’s revenue rises 2.1% to S$83.1m in 1QFY12

1QFY12 core net profit lower than expected. ASL Marine reported a 2.1% YoY rise in revenue to S$83.1m and a 5.8% increase in net profit to S$8.5m for 1QFY12. Revenue was in line with expectations and bottom-line was better than expected, but we note that the latter was bumped up by one-off items. Stripping away disposal gains, fair value gains on forward contracts and other non-recurring items, we estimate core net profit to be around S$3.6m, accounting for only 15.5% of our full-year estimate.

Confluence of factors led to lower gross margin. Gross margin was lower at 11.5% in 1QFY12 compared to 13.3% in 1QFY11 and 14.7% in 4QFY11, mainly due to the shipbuilding and ship chartering segments which registered gross margins that were at their lowest levels in the past few years.

Shipbuilding saw gross margin of 6.8% versus 9.2% in 1QFY11, and management explained that this was due to cost provisions made during the period for completed projects.

Ship chartering also recorded a lower gross margin of 14.5% compared to 21.1% in 1QFY11, mainly attributed to 1) lower vessel utilization rates, 2) a higher proportion of affreightment charters which generally yield lower margins, as well as 3) a depreciation charge of S$0.7m arising from cancellation of vessels that were earlier held for sale. Looking back, we find that gross margins for the various segments have also been decreasing since FY08, and we would continue to monitor these data points going forward.

Outstanding order book highest since 3QFY09. On a positive note, new order flow has picked up for ASL Marine, with the group securing S$426m worth of new contracts in the past four months alone. In comparison, only about S$93.5m new orders were clinched in CY2010. These contracts bring ASL's outstanding order book from external customers to about S$542m for 30 vessels with progressive deliveries till 1Q14.

Besides these, its shipbuilding arm is also constructing 12 vessels (comprising AHTS and barges) worth about S$32m for its ship chartering operations.

ASL is still receiving enquiries for newbuild orders, and platform supply vessels appear to be one of the kinds of vessels in demand currently. However, management highlighted that new orders will still take time to materialize, given protracted discussions with clients.