Mitrabahtera Segara Sejati, Satisfactory 1H12 Results

MBSS reported a 1H12 net profit of USD18m, good for a 34% y-o-y increase in spite of a 18% q-o-q drop. On a yearly basis, barging and floating crane volume saw robust growth while margins stayed stable. However, the company’s quarterly numbers suggest that revenue was stable but earnings were pulled down by higher costs.

9M12 results are being audited thus not announced yet. Overall, as the numbers were well within our estimates, we retain our forecasts and BUY call on the counter. We like MBSS as it is reinforced by undemanding multiples and secured revenue (due to contract basis).

Healthy y-o-y growth, stable q-o-q numbers
For the 6M period, barges tonnage volume surged 40% to 14.4m tonnes, driven by a 24% increase in the number of barges to 72, while that for floating cranes dipped by a slight 4% to 7.8m tonnes. This lower floating crane tonnage was due to a shortfall in cargo from a client, Banpu, which led to lower utilization of MBSS’ floating cranes.

A new floating crane arrived in May 2012, bringing the company’s fleet to six floating cranes by June, with contribution expected to come in from 2H12. On quarterly basis, barging volume increased by 6% while floating crane volume dropped 11%.

Margin slightly lower
Due to rising COGS, MBSS’ gross margin in 2Q12 dipped slightly to 38% from 42% in 1Q12, which resulted in its profit margin shrinking to 24% from 29% over the same period. The increase in cost was mostly related to a fuel price increase, depreciation and rising wages.

Barging still the main revenue generator
In 1H12, the barging segment accounted for 76% of the company’s overall revenue, while the remainder came from floating cranes. The higher barging tonnage was also the direct result of MBSS serving more routes of shorter distance, which translated into higher volume and lower rates, although margins remained stable. In 1H12, more than 85% of MBSS’ revenue was supported by minimum guaranteed volume.

Retaining BUY call
In view of the overall satisfying financial performance, we are retaining our earnings estimates on MBSS. The stock’s current valuation is undemanding at 3.7x-3.3x on FY12-13f earnings despite the recent unfavorable business conditions in the overall coal industry. We like MBSS as it is reinforced by undemanding multiples and secured revenue (due to contract basis).

TRANSPORT – MARINE
MBSS is a one-stop provider of sea-based coal transport with comprehensive services involving shore-based storage, barge loading, river and sea-based transport to off-shore loading of ocean-going vessels.