Wintermar Slightly Off The Mark For 2011
Wintermar Offshore Marine, Tbk (WINS IJ) indicated that its 2011 earnings will be slightly below its initial target of ~IDR140bn, owing mainly to a hefty USD loan obtained at an unfavorable rate of USD/IDR8,500. At the current ~USD/IDR9,000 rate level, the resultant forex loss will adversely affect its 2011 earnings. That said, we still expect it to post 2011 earnings of IDR134bn (+27% y-o-y) and its organic growth to remain intact. We have a BUY, with a TP of IDR480, as the stock provides an attractive 2012 earnings growth of 19%, and is relatively cheap at 2012-13 PERs of 7x and 6x respectively.
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2012 assumptions
We expect WINS’ 2012 revenue to jump 26% y-o-y on the back of higher existing vessel revenue, as a sizeable number of new vessels were contracted in 1H11, but their revenue contribution could only be fully recognized in 2012. Revenue is also expected to be further lifted by the confirmed purchase of six new vessels. Also, the company believes there is room for growth in the re-chartering vessel division, which prompts us to set a conservative 9% growth for this business in 2012. We expect gross margin to improve slightly to 29% in 2012 from 28% in 2011 on the back of a higher portion of owned vessels that could offset higher depreciation expense (linked to COGS). We expect higher interest expenses in 2012 as a result of the substantial loans obtained in 1H11.
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IFC facility to support expansion
WINS recently obtained an USD45m loan facility from the International Finance Corporation (IFC) with a maturity of seven years to support its vessel expansion in 2012. The loan should be sufficient to support its capex target of USD66m for 2012. We believe the company has solid financial backing to support its expansion and would therefore not encounter any cash flow problems.
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Industry outlook still conducive
The industry outlook remains favorable, buoyed by the increase in Indonesia’s targeted oil output to 930k–950k barrels/day in 2012 from only 903k barrels/day in 2011. Furthermore, with the deadline for Diving Support Vessels stipulated by cabotage set for December 2012, any potential catalyst for WINS to acquire this type of mid-class vessel could be possible.
Alluring valuations
WINS is currently trading at 7x and 6x 2012-13 PER. We expect the company to distribute dividends in 2012 based on last year’s earnings, with an anticipated dividend yield of 2.3% and 2.7% for 2012 and 2013 respectively. We maintain our 2012 PER-based Target Price of IDR480. Maintain BUY.
