Triyards Holdings - RHB Invest 2015-12-21: Boating In Some Holiday Cheer

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TRIYARDS HOLDINGS LIMITED RC5.SI 

Triyards Holdings (ETL SP) - Boating In Some Holiday Cheer 

• Triyards has won contracts worth USD45.5m in total for four vessels – a research workboat, two crewboats and a high-speed ferry – that takes orderbook on hand to USD622m before 1QFY16 recognitions. 
• Maintain BUY and SGD0.94 TP based on 1.05x FY15 P/BV, implying 6.6x FY16F P/E. 
• These contracts further diversify its orderbook from the oil & gas industry. 

 A diesel-electric workboat for ocean research. 

• The first and largest contract is for the Taiwan Ocean Research Institute’s (TORI) National Applied Research Laboratories, a Taiwanese government agency. This diesel electric-powered workboat is worth c.USD26.4m and is slated for delivery in FY17 (Aug). 

 Two crewboats and a high-speed passenger ferry. 

• The other orders are two 26-metre wind farm crew transfer vessels and a 36-metre highspeed passenger ferry. These contracts were awarded by new clients based in the UK and New Caledonia. 

 Order momentum propels orderbook to a record diversified high. 

• These contracts, together with the four tugboats won last month and the three chemical tankers in October, have brought Triyards’ orderbook to c.USD622m before 1QFY16 recognitions. This is not only a new record in quantitative terms, but also comprises a higher mix of non-oil & gas related vessels. 
• We view its agility in being able to switch product offerings in response to the economic conditions as a key strength that would enable it to ride out the turmoil in the oil & gas sector. 

 Margins sustainability adds to holiday cheer. 

• Workboats, crewboats and passenger ferries all fall well within the scope of what Triyards has delivered before. Thus, we believe that it can maintain its margins along historical averages. The high orderbook also works to spread fixed costs over a larger revenue base, further supporting margins. 
• Maintain BUY and SGD0.94 TP, based on 1.05x FY15 P/BV. This implies a mere 6.6x FY16F P/E. 
• Triyards remains one of our Top Picks in the sector. 
• As the year draws to a close, we wish management and investors Merry Christmas and a Happy New Year!

Lee Yue Jer CFA RHB Invest | http://www.rhbinvest.com.sg/ 2015-12-21

RHB Invest SGX Stock Analyst Report BUY Maintain BUY 0.94 Same 0.94