Wintermar Milking Cash From Offshore Blocks
COMPANY PROFILE
Owned by the Layanto family, Wintermar Offshore Marine, Tbk (WINS IJ) has been providing upstream services for the oil and gas sector for more than 40 years. It was established under the name of Swakarya Mulia Shipping in 1995 and subsequently changed its name to WINS. In that year, WINS won its first tender from Chevron and since then, it has continuously obtained certifications to increase its quality standards. What sets WINS apart from its local peers is the provision of additional services (heterogeneous), such as catering, crew recruitment and training, thereby becoming a “one-stop shop”. As a result, the company has been able to maintain good long-term relationships with its clients.
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KEY HIGHLIGHTS
Indonesia’s OSV leader. WINS recently clinched BP Berau’s tender worth USD56m to supply 2 anchor-handling tug supply (AHTS) vessels with specifications of 8,000bhp and 1 unit of drilling support warehouse barge (DWSB). The vessels will be financed by a combination of debt and internal cash, with the BP Berau project expected to commence sometime between 2H12 and 2014. This is the first time that WINS will be purchasing a 8,000bhp vessel and this shows its commitment towards fulfilling the needs of the oil & gas industry’s offshore blocks. It is willing to go to the extent of tweaking its vessel portfolio to incorporate high-value vessels in order to serve its clients. Such flexibility will put the company in a better position to bag even more long-term contracts and thus, enjoy stable earnings moving forward.
Wintermar Breaking The Pedals
Wintermar 3Q12 Brief Notes
Express Bonds’s Price Touch Level 19%
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Outlook remains bright despite deteriorating global economy
Oil price has maintained above USD100/barrel which could spur the oil majors to spend more on capex which could, in turn, lead to higher demand for offshore support vessels (OSV) in offshore blocks.
Capital-intensive business.
We expect WINS to add 8 vessels, with a mixed proportion of mid- and high-end vessels, to its fleet. With such plans in mind, the company is anticipated to leverage up its balance sheet, with net gearing reaching 66% in 2012 and jumping further to 75% in 2013.
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Higher revenue proportion of owned vessels in 2012
We forecast 2012 revenue to increase 12% y-o-y, with its bottom-line expected to improve 22% y-o-y. Despite revenue growing at a relatively conservative rate this year, we believe a higher proportion of owned vessels this year could enhance margins and lead to better bottom-line growth.
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COMPANY REPORT CARD
ROE. The company’s ROE is expected at 13% for 2012 and 14% for 2013.
Management. WINS is run by a capable management team which consists of individuals with many years of experience in the industry.
Dividend. The company has a dividend payout policy that distributes 20%-30% of its profits.
RECOMMENDATION
Valuation. We increase our target price to IDR540 (from IDR480) with an implied target PER of 12x. We view this valuation as reasonable, considering that its current 2012 PER of 9.7x represents a 41% discount to the sector’s average 2012 PER. Buy.
