Wintermar Earnings Quality Ahead
Company Profile
WINS has been involved in marine transportation since 1970 catering offshore support vessels to the oil and gas. It also provides fleet support to the upstream activities of offshore oil and gas companies. WINS’ clients are oil & gas giants, such as Chevron, Exxon Mobil, Conoco Phillips and Pertamina.
Highlights
A young OSV industry. Indonesia’s OSV industry is still at an early cycle, and its strong earnings growth in 2013 from the cabotage policy indicates that market visibility is crystallizing. Now, all WINS vessels are protected by the cabotage law – which provides more room for strong horizontal expansion going forward. Furthermore, we see much room for the demand for vessels with dynamic positioning (ie high-tier vessels that enjoy premium tariffs) to grow – which bodes well for WINS.
Strong back up from IFC
International Finance Corporation (IFC) recently converted its USD10m convertible bonds in WINS and now effectively has a 4.9% ownership in WINS. With IFC’s support, WINS has successfully delivered its growth strategy on expanding to higher value Offshore Support Vessels (OSV) to cater the needs of the deepwater offshore oil and gas (O&G) industry. With IFC in the loop, we suggest WINS is at confidence to provide word class marine logistic services for the domestic oil and gas industry.
Better earnings quality ahead. We expect WINS to deliver strong earnings growth of 25.6% y-o-y and 32.8% in 2014-15 mainly driven by strong vessel expansion to high-tier vessels. After the strong business growth obtained from exploration activities and cabotage implementation back in 2013, we expect WINS to be exposed to longer-term contracts in 2014-15, which enhances earnings quality going forward.
Company Report Card
Latest Results. Wintermar Offshore Marine (WINS)’s 4Q13 revenue of USD56m (+14.4% q-o-q, +43.1% y-o-y) and earnings of USD9m (+24.4% q-o-q, +52.3% y-o-y) brought FY13 turnover and net profit to USD187m (+50.4% y-o-y) and USD27m (+33.8% y-o-y) respectively. Its FY13 bottom-line was 6%/12% above our/consensus estimates respectively.
