Jason Marine Group - SAC Capital 2022-07-08: Orders Are Returning

JASON MARINE GROUP LIMITED (SGX:5PF)

Jason Marine Group - Orders Are Returning

Jason Marine (SGX:5PF)'s FY22 revenue and net profits were S$30.9m (+3%) and S$0.2m (-23%) respectively. The decline in net profit is mainly due to a decrease in government grant of ~S$1.2m and one off termination payment of ~S$0.5m in FY21. Government grant support ceases in FY23.

Enquires from customers have picked up post-opening, and more projects are coming back on-stream after a slowdown in the past 2 years. Local output of marine and offshore engineering work in April has risen 27.6% y-o-y and 18.3% from Jan-April. Higher crude prices, shipbuilding orderbook and easing of travel restrictions are tailwinds for the sector. We believe Jason Marine’s order intake could return to pre-pandemic level.
Jason Marine has established an office in Italy. This will better position them to enter the EU market and expand their outreach to EU customers.
Vessel owners are also placing more importance on cybersecurity, prompting more upgrades/replacements to their navigation and communication systems. This trend is likely to benefit the Group as well.
Like other project engineering companies, Jason Marine faces execution challenges from component/equipment shortages which might delay revenue recognition and risk cost overrun. Jason Marine reflected lower project-based revenue (-7%) as the Group was unable to secure the equipment hence hampering the progress of its projects. Nevertheless, these shortages are short-term concerns and likely to ease as chip capacities redistribute following a slowdown in consumer electronics demand.
In view of market uncertainty and volatility, Jason Marine has drawn down a $5m loan solely for working capital needs. The loan is fixed at 2-2.5% per annum over a 5-year tenure.

Lim Shu Rong SAC Capital Research | https://www.saccapital.com.sg/ 2022-07-08

SGX Stock Analyst Report NOT RATED MAINTAIN NOT RATED 99998.000 SAME 99998.000