PACC Offshore Services Holdings - OCBC Investment 2017-05-31: One For The History Books

PACC Offshore Services Holdings - OCBC Investment 2017-05-31: One For The History Books PACC OFFSHORE SVCS HLDG LTD. U6C.SI

PACC Offshore Services Holdings - One For The History Books

  • Significant role in supporting Shell Prelude.
  • POSH Terasea to remain busy.
  • But insufficient to offset softness in other areas.

World’s largest offshore facility to sail away soon 

  • Shell Prelude, the world’s largest offshore facility ever constructed, is set to be delivered in late Jun by Samsung Heavy Industries and should arrive in Australia after a two-month journey1 .
  • This revolutionary vessel – bigger than the combined size of four football fields and six times the weight of the world’s largest aircraft carrier – compresses the sprawling mass of a traditional land-based LNG plant into a large custom-built barge. 
  • Petronas has already deployed the world’s first LNG facility in Malaysia, but Prelude will be far and away the largest.

To play a significant role in supporting project 

  • It is hence perhaps a source of pride for Singapore that two local companies, PACC Offshore Services Holdings (POSH) and Ezion Holdings, will play a part in supporting this significant project. 
  • POSH Terasea, a 50-50 JV between POSH and Terasea Pte Ltd (in turn a JV between Ezion and Seabridge Marine Services) will be responsible for the 4800km tow from Samsung, and the positioning of the vessel at the Prelude field in Australia. 
  • POSH will also be providing its semi-submersible accommodation vessel POSH Arcadia to house up to 750 workers during the hook-up and commissioning phase, a huge undertaking that could take up to four months, according to Upstream’s sources. 
  • For the towing work, five vessels will be deployed – the AHT vessels Terasea Osprey, Terasea Falcon, Terasea Hawk and Terasea Eagle, plus the 16,000 BHP AHTS vessel POSH Champion.

POSH Terasea a bright spot but not enough 

  • Besides this, POSH Terasea is also scheduled for work for the INPEX Ichthys CPF and FPSO, as well as Egina FPSO unit. Hence after a relatively quiet 1Q17, POSH Terasea is expected to ramp up and remain busy for the rest of the year. This compares to net loss of US$7.8m in 2016 and net profit of US$15.7m in 2015. 
  • Meanwhile, the overall operating environment for the broader sector remains challenging, especially for the OSV segment and some parts of the offshore accommodation segment. 
  • We tweak our USD/SGD assumptions and our FV eases slightly from S$0.335 to S$0.325. Maintain HOLD.

Low Pei Han CFA OCBC Investment | 2017-05-31
OCBC Investment SGX Stock Analyst Report HOLD Maintain HOLD 0.325 Down 0.335