Triyards Holdings - RHB Invest 2016-01-04: Santa Returns For New Year Celebrations

Triyards Holdings - RHB Invest 2016-01-04: Santa Returns For New Year Celebrations TRIYARDS HOLDINGS LIMITED RC5.SI 

Santa Returns For New Year Celebrations 

  • Triyards won another contract for two oil barges worth USD21.8m in the last week of the year, adding to the ones it landed on Christmas week. 
  • Maintain BUY and SGD0.94 TP (114% upside) based on 1.05x FY15F P/BV. This implies 6.6x FY16F P/E. It trades at 1.96x expected orderbook profits. 
  • Last, but certainly not least, a Happy New Year to management and investors, and the best of health to families and loved ones! 


 More Taiwanese work. 

  • The two oil barges worth TWD716m (c.USD21.8m) are intended for coastal service and the supply of bunker fuel to vessels in Taiwan’s harbour and coastal areas. They are slated for delivery in 2QFY18 (Aug). 

 Fourth new customer this month. 

  • The contracts were secured from a new client, CPC Corp (CPC), a state-owned oil & gas company that supplies energy to the Taiwanese market. 
  • CPC is Triyards’ fourth new customer this month, the first three being the Taiwan Ocean Research Institute and two customers based in the UK and New Caledonia respectively. They ordered four vessels worth USD45.5m in total. 
  • We view this as a strong positive, ie Triyards’ ability to secure contracts from new customers, especially blue-chip clients like CPC and government agencies. This ought to raise its industry profile and pave the way for more contracts in the coming months. 

 Orderbook is c.6x market cap, and the stock trades at 1.96x orderbook profits. 

  • These contracts have driven Triyards’ orderbook to c.USD644m before 1QFY16 recognitions, which is 6.4x its USD101m market cap. 
  • Even taking the expected recognitions into account, the orderbook could be c.5.5x Triyards’ market cap. 
  • The firm also has 19 months of work in hand, and we expect this figure to rise as more contracts are won. 
  • Taking a conservative 8% net margin (FY14/FY15 were at c.10%), Triyards is trading at 1.96x the expected profits in its orderbook. 
  • Maintain BUY and SGD0.94 TP. The stock is one of our Top Picks in the sector. 

 Happy New Year! 

  • 2016 should be the year where the oil market finds its bottom and the overproduction begins to narrow, hopefully turning sentiment more positive. We wish management and investors a Happy New Year, and the best of health to families and loved ones!


Lee Yue Jer CFA RHB Invest | http://www.rhbinvest.com.sg/ 2016-01-04
RHB Invest SGX Stock Analyst Report BUY Maintain BUY 0.94 Same 0.94

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