Mitrabahtera Segara Sejati, Results In Line; Valuation Still Cheap

Mitra Bahtera Segara Sejati (MBSS) managed to book a 23% y-o-y growth in FY12 net profit (in line with our estimate) despite negative earnings growth for the coal sector in FY12. This reflects the company’s resilient fundamentals against external shocks, backed by its long-term contract relationships and minimum guaranteed coal volume. Although capex is at its minimum for 2013, we believe MBSS could still book a 15% earnings growth this year, driven by revenue realisation from its vessel acquisitions in late 2012.

Should the coal outlook pick up, we see the likelihood of further upside risk than downside risk. We have a BUY call on this stock with a IDR1,500 TP. MBSS is trading at undemanding valuation of 5x for 2013 and 2014 PERs respectively, with an attractive dividend yield of 5% for 2013.

FY12 results meet expectations
MBSS’ FY12 revenue increased 16.3% y-o-y, supported by both current working contracts and additional new contracts. Its direct costs climbed 16.0% y-o-y as the addition of vessels shored up fuel and depreciation costs. This led to a stable gross margin of 40% in 2012 (similar to 2011’s).

MBSS’ FY12 opex of USD11.9m was relatively stable compared with 2011’s USD12.8m, as the group had made various efforts to improve cost efficiencies. Financing costs increased 16.5% y-o-y in 2012, in line with the increase in bank loan to fund the purchase of new fleets. Despite higher costs, MBSS was able to book pre-tax profit of USD38m (+28.9% y-o-y) and net profit of USD37m (+23.3% y-o-y; in line with our FY12 estimate).

Valuation remains cheap
While its share price has increased by 17% since our last report dated 25 Jan 2013, we still deem MBSS trading at undemanding multiples of 5x for 2013-14 PERs respectively, on top of its attractive dividend yield of 5% for 2013. We are revising our 2013-14 earnings forecasts as we incorporate the FY12 audited figures. For now, we maintain our IDR1,500 target price and BUY call.