Mitrabahtera Segara Sejati, No Suprises

MBSS’ 1Q13 bottom-line grew 1.6% q-o-q and 4% y-o-y to USD10m, driven by a robust 56.9% y-o-y surge in floating crane sales (21% revenue contribution). 1Q13 net profit accounted for 25% of our FY13 net profit. The company’s cash position stood at USD21m on better receivables and working capital management, providing flexibility for larger capex allocation should the coal market recovers.

1Q13 results within expectations
MBSS’ 1Q13 revenue climbed 9.6% y-o-y, mainly buoyed by the operation of two new floating cranes, namely FC Blitz (started in May 2012) and FC (started in December 2012). This led to a 13.9% y-o-y EBITDA growth. The barging segment dipped 3.4% y-o-y as guaranteed volume by several clients in 1Q13 did not meet expectations. Its 1Q13 direct costs increased 11.9% y-o-y due to higher depreciation and fuel cost hike, which slightly squeezed gross margin to 41.0% from 42.2% in 1Q12. 1Q13 net profit ticked up 4% y-o-y to USD10m, which was in line with revenue growth.

Healthy balance sheet
Given its strong receivables and working capital management, MBSS had a strong cash position of USD21m in 1Q13. The company’s 1Q13 net gearing position was at its lowest level at 40.9%, and it expects no capex expansion this year.

Our take
We like this stock for its defensiveness against the gloomy coal outlook and resilience in a bottom situation. Should the coal market pick up, we see MBSS is at most ready to enjoy a smooth expansion growth given its: (i) Ample room for leverage given conservative gearing level, (ii) long-term contracts (1-7 years) with minimum guaranteed volume from reputable coal producers, (iii) high cost optimization with advanced technologies, and (iv) robust underlying business process.

Earnings, TP, recommendation remain intact
MBSS, which is currently trading at 5x and 4x 2013-14 P/Es respectively, provides dividend yields of 5.4% and 6.2% for 2013-14. We maintain our target price at IDR1,500 with a BUY call.