Wintermar Fundamentals Remains On Solid Footing
1H14 earnings hit USD13m (+11.4% y-o-y), accounting 38%/40% to ours and the street’s FY14 target. The lower than expected earnings is mainly driven by higher than expected interest expense and lower than expected 3rd party chartered vessels. However, we see fundamentals in the OSV industry remains on solid footing and abundant OSV projects is imminent going forward. Maintain BUY with 2015 target PER of 12x.
Indonesia Kendaraan Terminal Target 38% of Revenue Growth
Prodia Profit Increase 238%
Pelindo I Plans to Issue Bonds and Asset Securitisation for FY18 Capex Funding
Express Bonds’s Price Touch Level 19%
Indonesia June Trade Balance’s Forecast Surplus USD579.5Mn
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Significant reduce on its chartering segment
2Q14 revenue declined 7.7% q-o-q driven by lower chartering segment (USD10m, -41.8% q-o-q), however, own-vessel revenue segment went up to USD30m (+15.6% q-o-q). 2Q14 own-vessel margin declined significantly to 49.3% compared to 57.5% in 1Q14 given lower utilization rates as there were several delays in government approvals for large OSV contracts.
Pakuwon Jati’s Marketing Sales IDR1.08Trn in 1H18
Wintermar Fundamentals Remain Solid
Marga Lingkar Jakarta Bond Ratings at Level AAA
Shelf Registration II WOM Finance Tranche II Year 2017
China’s Economy Strengthen
Incoming Bids Surged to IDR42.32T, Highest This Year
2Q14 chartering margin was the highest ever at 11.5% compared to 8.8% in 1Q14 as many outside vessels want to look for jobs in Indonesia waters thus rates increased. We expect Wintermar to reduce its uncertain lower margin chartering segment and focus revenue generation from its own vessels similar compared to Logindo Samudramakmur (LEAD IJ, BUY, TP: IDR6,300) where its revenue is fully generated by its own vessels.
Bank BTN Cut Non Subsidies Mortgages in Early 2018
One Upgrade; One Downgrade
ORI014 Sales Only 67% of the Target
Corporate Bonds Worth IDR3.46Trn will be Due This Week
Credit Grew 11.5% in 2018
Foreign Exchange Loan is Secure amidst the Rupiah Depreciation
Solid EBITDA
Fundamentals remains strong shown on 2Q14 EBITDA which increased by 6.1% q-o-q to USD20m. However, 2Q14 interest expense increased 61.9% q-o-q to USD4m from fleet expansion through loan attainments, which drags net profit to decline by 31.4% q-o-q to USD5m. 2Q14 net gearing stood at 63%.
Strong fundamentals with abundance of upside potential
We expect 2015 on wards for utilization rates to pick up, vessel expansions to continue and lucrative projects to pursue. There are upside potential from Wintermar USD500m market capitalization company, with net gearing below the 0.7x level and an early notice to the market for a non-preemptive rights issue plan (9% of shares outstanding) as this indicates their balance sheet ability to fund large oil and gas assets should cabotage deadlines for 2014-15 is enforced by the government.
As fundamentals remains on solid footing, we maintain our BUY call and TP at IDR1,610 with a 2015 target PER of 12x. 5% earnings cut for 2014 on lower chartering segment and lower own vessel blended utilization rate
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Government Spending and Revenue Realization Reached Only 75.9% and 76%
Earnings revision
We cut 2014-15F revenue target by 10% and 7% given lower-chartering segment exposure. Yet the lower exposure on the thin margin chartering, should push to a higher blended margin mix. We lower our 2014 earnings as we lower the chartering segment and lower our blended utilization rate for its own vessels. Note that utilization rate in 1H14 is at 73%, lower compared to 75% in 1H13.
Based on our oil and gas thematic report on Indonesia Oil & Gas – Reform Is On The Horizon issued back on 20 June 2014, we mentioned that we saw the sector undergoing reforms regardless of changes in the political landscape as there is urgent need for O&G investments to meet strong domestic demand. We expect the O&G industry activities to pick up as soon as the new cabinet of Jokowi-Kalla is installed towards the end of this year.
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Yield on Indonesia Long Term Govvies Inched Up to 10%
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70% of Indonesia’s O&G resources are located in offshore waters and Wintermar operates in such huge offshore waters in a protected market at an early cycle. We see that upside suprises is on the cards and the OSV industry is seen to continously be a dynamic market in Indonesia given lots of exposure on exploration, development and production activities. 65% of Wintermar’s fllet now positioned in the high value segment, thus in a strong position to serve the needs of the deep water O&G industry.
