ASL Marine's revenue surged 7.3%

Here's why it's not resting on its laurels just yet.

According to OCBC Investment Rsearch, ASL Marine reported a 7.3% YoY rise in revenue to S$83.0m and a 39.8% increase in net profit to S$10.6m in 2QFY13, such that 1HFY13 net profit accounted for 48% of its full year estimates, in line with its expectations. 

Here's more:

Gross profit margin increased from 17.3% in 2QFY12 to 23.4% in 2QFY13 due to better margins in all three core business segments- shipbuilding, repair and conversion, and shipchartering. 

Given ASL’s busy yards, the group can only start work on new orders only in mid 2013. Along with its healthy order book, management is not in a hurry to secure new orders – we understand that ASL will aim to start securing orders after Jun this year.

Meanwhile, management updated that they are still receiving healthy enquiries for AHTS vessels and DSVs, but there is less interest in PSVs, perhaps due to substantially lower prices offered by new Chinese competitors (prices may be as much as 20% lower). 

The group’s shipbuilding net order book (comprising 34 vessels) stood at S$528m as at 31 Dec 2012 with progressive recognition up to 4QFY14, providing revenue visibility. 

Out of this, about 34% will be recognized in 2HFY13. ASL also has an outstanding order book of about S$83m with respect to longterm shipchartering contracts.

Since our last report on 3 Dec 2012, the stock has done well, with its share price appreciating by 13.8% vs the STI’s 6.7% gain over the same period. Despite this, we still see upside potential. We roll forward our valuation to blended FY13/14F earnings, still based on an unchanged PER of 10x. As such, our fair value estimate rises from S$0.82 to S$0.86. Maintain BUY. (Low Pei Han)