Wintermar Bottomline In Line

WINS’ 1HFY13 earnings came as no surprise, accounting for 49% and 50% of our and consensus FY13 targets respectively. Gross margins were relatively maintained, aided by rising re-charter business and rates. Yet, higher interest expenses pressured bottomline margins to 13.8% (1HFY12: 18%). We also see 2HFY13 as relatively similar to 1HFY13 and we maintain our BUY call with TP of IDR640.

In line with expectation
WINS booked 2QFY13 net profit of USD5m (-6% q-o-q; +1.1% y-o-y), taking 1HFY13’s earnings total to USD11m (+9.8% y-o-y). This accounts for 49% and 50% of our and consensus FY13 estimates respectively. While this result was relatively in line in our view, topline was slightly above what we expected, due to the higher than expected re-charter component. 1HFY13 gross margins levels were relatively the same as they were last year, at around the 30% mark.

However, bottomline margins declined to 13.8% from 18.1% in 1HFY12 – primarily due to higher interest expenses. It is worth noting that WINS took delivery of seven new vessels in 1HFY13 (three commenced operations in 1QFY13 while the remaining four were delivered in 2QFY13). WINS’ 29% y-o-y increase in 1HFY13 revenue was boosted by the addition of these new vessels.

Rising offshore support vessel (OSV) demand equates to viable fleet expansion. Given strong demand for OSVs in the market, re-chartering is necessary to capture the opportunities. However, we note that Management is prudent when it comes to vessel expansion, preferring to ensure that OSV utilization rates are at satisfactory levels before undertaking further steps.

Attractive valuations relatively cheap
We see WINS’ consistently satisfying results embedding premium valuations to its fundamentals. The rise in OSV demand amid a tight supply condition currently is a pivot to the industry’s bright outlook. Hence, we maintain our BUY call with a TP of IDR640, with an implied FY14F P/E of 9.0x.