Wintermar Positive Outlook Persists
Investment Merits
a. Limited impact from the tender banning on its subsidiary
b. Positive outlook remains intact
c. Potential upside to our earnings growth forecasts
Company Profile
Wintermar Offshore Marine (WINS) has been involved in marine transportation since 1970. It also provides fleet support to the upstream activities of offshore companies. Its clients include oil and gas (O&G) giants such as Chevron, Exxon Mobil and Conoco Phillips.
Highlights
Tender bans impacted limited. In a recent newsletter, WINS revealed that industry regular SKK Migas had prohibited its subsidiary PT Wintermar from submitting tenders for a year after an accident between its vessel and a small fishing boat resulted in a fatality and two minor injuries. We believe the impacts of this ban is limited as there are avenues available to Wins to circumvent it.
Eximbank on Positive Outlook; PPRO Outlook Revised to Negative
Six SOEs on Positive Outlook at Fitch; 1 Rating Upgrade at Pefindo
Shelf Registration II WOM Finance Tranche II Year 2017
Muted Reaction on Outlook Upgrade by Fitch
Four Government mission to Indonesia at a meeting of the IMF-World Bank
Positive outlook remains intact. Indonesia recently opened a rights tender for 21 O&G exploration blocks, 17 of which are offshore, mostly in the eastern half of the archipelago. These areas are estimated to contain up to 3.1bn barrels of oil and 57.6trn cubic feet of gas, according to Edy Hermantoro, the O&G director general of the Energy and Mineral Resources Ministry. This is a testament of the sustainability and growth for the offshore support vessel (OSV) industry. Wins should benefit from the increased exploration, production and post-production activities. We are not concerned about competition given that Indonesia’s cabotage ruling protects domestic flagged vessels. However, given its lack of expertise in high-end OSVs, Wins may form JVs to expand.
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As WINS embark on new activities, which would include exploration jobs, short-term contracts of less than one year would be increasingly featured in its contracts portfolio. This would make it riskier for the Company to purchase its own vessels given the utilization uncertainties. Potential upside to earnings growth forecasts. We expect a 15% y-o-y earnings growth in FY14 to USD27m, mainly spurred by vessel expansions in 2013 which would only be fully reflected in 2014. We have not accounted for any potential tenders in the pipeline and consider this as an upside potential to our current earnings forecast.
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