Wintermar An OSV Leader In Indonesia
The earnings of Wintermar Offshore Marine, Tbk (WINS IJ), a leading Indonesian OSV player, have risen consistently since its Nov 2010 IPO. It has beaten the JCI by 40% since the market peaked on 20 May 2013, buoyed by its sturdy fundamentals. As its 9M13 earnings beat our estimate, we expect alluring double-digit earnings growth from fleet expansion in 2013-14. Our IDR740 TP implies a 8x FY14 P/E, at a 42% discount to the regional OSV sector. Maintain BUY as the stock has much to offer in the short- and long-run.
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Company background
WINS is a leading offshore support vessel (OSV) player in Indonesia with ~40 years of experience. The company has diversified its relatively young fleet with low- to mid-high tier vessels offering support services for offshore oil & gas (O&G) blocks in Indonesia. It has multi-national O&G clients and is the first local shipping company to obtain certification for its integrated management system from Lloyds Register Quality Assurance. WINS were expected to own 71 vessels by end-2013.
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Closed 2013 with a bang
Although the JCI has slid 18% since its 20 May peak on concerns over Indonesia’s current account deficit and inflation, WINS’ share price has gained by 28%, buoyed by its strong fundamentals. Its sturdy 9M13 net profited beat our estimates, accounting for 79% of our FY13 numbers. We estimate 2013 net profit to jump 16.8% y-o-y to USD24m.
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2014 to be a strong year
We expect WINS to book earnings amounting to USD30m (+26.6% y-o-y) in 2014 as we see the solid expansion of its fleet (amounting to USD92m) in 2013 significantly propelling earnings this year. Indonesia’s cabotage policy, which was implemented in early 2013, has led to foreign players exiting the market and benefitting Indonesian flagging vessel owners like WINS, which expanded its market share.
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Cheaply valued, with PEG of <1x, maintain BUY
We have a BUY call, with a IDR740 TP, implying a 8x FY14 P/E on the stock – at a 42% discount to the regional OSV sector. We believe WINS is still cheaply valued and has much to offer in the short- and long-run. Key risks are: i) a significant drop in oil prices, and ii) intensifying competition.
