Wintermar a One-Stop Shop

Opportunity to gain market share
From May this year, Indonesia’s shipping law will no longer allow foreign-flagged vessels to operate in Indonesian coastal waters unless they are in joint ventures in which there is no more than 49% foreign ownership. Management believes this would give WINS the opportunity to get a slice of foreign competitors’ pie as some 63 foreign vessels (with 12% market share) currently garner 56% of the market revenue.

WINS plans to obtain 7 new vessels this year as 63% of its vessels are in the low-tier class, whereby these vessels can only command up to a maximum tariff of USD3,000 per day, whereas the mid-tier and high-tier vessels can charge up to USD18,000 per day. WINS believes that increasing the number of new vessels could lead to margin improvement as well as capitalize on the cabotage regulations. It is worth noting that regardless of whether cabotage would be implemented, management still believes that it would still achieve financial growth.

Unique business model
The company operates offshore vessels that support for oil & gas companies’ upstream activities. What sets WINS apart is that it provides various services (heterogeneous), which make it a “one-stop shop’’ offering a variety of owned-vessels with different functions to cater to customers’ needs.

The average gross margin from such vessels is around 40%. In order to complete its range of services, WINS also provides charters to cater to clients’ specific requests by renting its vessels from other companies or competitors and in turn charter them to its clients for a small margin of about 3%.

High quality standards
WINS is prudent in terms of safety, as is proven by its focus on safety management via obtaining several domestic and international certification, from International Ship and Port Facilities Security Code (ISPS), the ISO 9001:2008 certified by Lloyds Register Quality Assurance( LRQA) and the International Safety Management (ISM) Code certified by American Bureau of Shipping (ABS).

The company maintains good relationships with its clients, as was the case when Chevron gave it an ‘A’ grade for performance. This shows that WINS has attained the high minimum standards required to become an oil contractor to major international oil & gas companies such as Chevron, Exxon, Conoco Phillips and etc.

Indicative earnings
Management said it will attain its FY10 revenue target of IDR650bn (+64.9% y-o-y), mainly from the contribution of chartered vessels and expects a 35% growth in this year’s revenue. The management believes that the increase in the number of vessels at the end of last year will have a positive impact on its 2011 earnings.

The company expects its FY10 bottom line to hit IDR100bn, down slightly by 0.38% y-o-y, as it made a huge forex gain of IDR29bn in 2009 that inflated its earnings. Management sees 2010 earnings of IDR100bn but without any windfall from forex gains. The company has allocated USD100m for capex for FY11 to finance its purchase of 11 new vessels.