Mermaid Maritime's orderbook decline a worry

It plunged 37% to $220m in 3Q.

Mermaid Maritime's 3Q16 profits were above expectations on cost savings, but the low orderbook calls for caution, said DBS Vickers Securities.

Mermaid Maritime reported a core net profit of US$7.5m (S$10.6m) on improved cost savings. However, the orderbook has decreased to a low of US$155m (S$220m) from US$246m ($349m) as of end- 2Q16, and thus revenue visibility has deteriorated markedly.

Revenues came in at US$51.9m ($74m) for the quarter – in line with OCBC's estimates of about US$53m (S$75m). Vessel utilisation was 56%, higher than the 45% in 2Q16 (as 3Q is usually a seasonally strong quarter), but lower y-o-y versus the 81% seen in 3Q15 due to the continuing idling of three smaller vessels.

According to DBS Vickers Securities, this quarter’s drawdown was a combination of revenues recognised and lower rates negotiated on certain charters.

Bidding season, which peaks in 1Q, could provide some respite early next year in the form of order wins, though there is no guarantee, it said.