PACC Offshore’s gross profit plunged 35% in Q3

Blame it on seven idle vessels.

Mainboard-listed PACC Offshore Services Holdings today revealed that its gross profit plunged 35.1% to $22.6m (US$17.4m) in the third quarter, from $34.6m (US$26.7m) in the same period last year.

The group also reported a loss of $6.5m ($5m), brought about by seven idle vessels in its Mexican joint venture.
According to Maybank Kim Eng, PACC Offshore has taken longer than expected to resolve its Mexican issues, but that it is only a matter of time given Mexico’s robust oil & gas industry.

“We are optimistic about contracts but have toned down our day-rate expectations by 20% in view of general sector weakness. Vessels at its Mexican JVs are still idle and POSH has taken longer than expected to resolve this,” noted Maybank Kim Eng.

Here’s more from the report:

We lower FY14E-16E EPS by 7-11% for more conservative day rates and utilisation. Even then, POSH offers a 3-year EPS CAGR of 35%. 

It has 18 new vessels coming over the next two years. Near-term catalysts should be a contract award for its second SSAV and GOSH’s return to profitability. Our TP dips from SGD1.26 to SGD1.12 on an unchanged 11x FY15E EPS, which could be revised further pending sector review.

POSH still sees sustained demand for its PSVs and accommodation vessels from oil companies’ focus on oil & gas development and production. FY15E growth should be propelled by five new accommodation vessels, including two SSAVs. One of the SSAVs has yet to secure a contract.