Q1 2011/12 results update
BUY
Jaya Holdings
An interesting player to watch 08.11.2011
Jaya’s Q1 2011/12 results exceeded our expectations, with a 44% EBITDA margin (versus our 34% estimate). As the shift to higher chartering exposure may take time, Jaya’s build-to-sell yard strategy could, in our view, continue to prompt earnings volatility. Over the medium- to long term, we believe Jaya could be an interesting M&A target for offshore companies, given its undemanding market-implied fleet value and its market knowledge in positioning for chartering contracts in Asia and the Middle East. We reiterate our BUY recommendation and NAV-backed SGD0.90 target price.
JAYA vs STI (12m) 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 Nov Jan Mar May Jul Sep Nov Jaya Holdings STI (Rebased)
Share price and target Price SGD SGD Price target 12m Prev. Recommendation Key data per share Book value SGD NAV SGD P/Book X P/NAV X EPS gr11-14e %cagr Financial structure Market cap. SGDm Net int. bear debt SGDm Enterprise value SGDm Shares outst. Millions Equity/tot assets % Share price performance Abs. 1/3/12m Rel. 1/3/12m High/Low 12m SGD STI index 30days volatility % Company attributes Reuters ticker Supply Singapore
0.45 0.90 Buy 0.73 0.98 0.61 0.45 -5.8%
Year end Jun EPS EPS adj Dividend ps P/E P/E adj Dividend yield P/Book EV/EBITDA adj EV/EBIT adj Revenue EBITDA Pre-tax profit EBITDA margin ROCE adj
•
342.7 88.05 430.8 770.1 60.6
•
1/-12/-39 -7/-11/-25 1/0 2848.2 37
•
JAYA.SI
•
Analyst: Kay Lim, CFA +65 6220 5123
[email protected]
•
Simon Jong +65 6223 3604
[email protected]
•
Thor Andre Lunder +44 207 621 6085
[email protected]
Please see the next to last two pages for important information.
•
SGD SGD SGD X X % X X X SGDm SGDm SGDm % %
2009 0.00 0.00 0.00 nm nm 0.0 0.71 10.6 16.1 263 50 21 18.9 4.4
2010 0.13 0.13 0.00 5.0 5.0 0.0 1.09 7.1 8.9 357 94 70 26.2 8.9
2011 0.11 0.11 0.00 5.4 5.4 0.0 0.81 9.2 16.7 127 58 27 45.3 3.6
2012e 0.04 0.04 0.00 12.0 12.0 0.0 0.58 7.0 11.8 246 67 35 27.2 4.4
2013e 0.12 0.12 0.00 3.7 3.7 0.0 0.50 2.9 3.7 655 146 112 22.3 12.1
2014e 0.09 0.09 0.00 4.9 4.9 0.0 0.46 2.6 3.5 486 119 84 24.5 8.7
Earnings above expectations on stronger margins. Q1 revenue was SGD35m, against our estimate of SGD40m, EBITDA was SGD15m (our estimate SGD14m), net income SGD6m (our estimate SGD4m) and EPS SGD0.008 (our estimate SGD0.006). Better newbuild cost control allows for competitive pricing. The sale of one vessel in Q1, which we believe was a 5,150bhp AHTS, was as we expected, but the USD12.5m sale price was 10% below our USD14m forecast. We attribute this to lower construction costs for the vessel (note that margins in the Shipbuilding segment exceeded our estimates), allowing for a lower pricing. Dayrates stable in Q1, with better revenue efficiency. The Chartering division posted revenues of SGD20m (our estimate SGD22m) and EBITDA of SGD11m (our estimate SGD10m). Chartering fleet utilisation was 68% in Q1, below our forecast of 73%, due to the addition of six newbuilds to its fleet. Balance sheet position. With current net debt of USD72m as of the Q1 2011/12 release, short-term borrowing of USD23m, longterm debt of USD235m, and a fair value (our estimate) of USD508m for its chartering fleet, we believe Jaya is able to meet its debt obligations and remaining capex commitment. Outlook. Management is seeing positive signs of improving demand and utilisation. However, charter rates remain soft, as the market is still absorbing excess tonnage. Estimate revisions. The net impact on EPS is -23% for 2011/12e, -9% for 2012/13e and -8% for 2013/14e. Our lowered estimates are not a function of weaker business fundamentals, but rather the timing of earnings recognition for the newbuilds added to the chartering fleet. Valuation and recommendation. We reiterate our BUY recommendation and NAV-backed SGD0.90 target price.
08.11.2011
Q1 2011/12 results update > Jaya Holdings
Q1 2011/2012 (September-end) review Q1 earnings – change of functional currency Jaya reported its Q1 earnings on 3 November after market close and also announced that it had changed its functional currency to USD. For estimate comparisons, we have translated all figures based on a USD/SGD exchange rate of 1.23, the average for July–September 2011. Earnings above expectations on stronger margins Q1 revenue was SGD35m, against our estimate of SGD40m, EBITDA was SGD15m (our estimate SGD14m), net income was SGD6m (our estimate SGD4m) and EPS was SGD0.008 (our estimate SGD0.006). Revenue was marginally lower than our estimate, though the EBITDA margin exceeded our forecast. We believe that the higher than expected EBITDA margin can be explained by better cost control in its chartering fleet and newbuild programme. Q1 2011/2012 results, converted to SGD at USD/SGD1.23 SGDm
Q1/12
Q1/12e
Reported DnB NOR Operating revenues
35.1
%
Abs.
%
39.7
na
-4.7
-12%
n.a.
na
na
1.8
13%
n.a.
na
15.4
13.7
EBITDA margins
44%
34%
Net finance Pretax earnings
Rep. vs Market
Abs.
EBITDA EBIT
Q1/12 Rep. vs DnB NOR Cons*
8.3
7.0
na
1.3
19%
n.a.
na
-1.1
-1.7
na
0.6
37%
n.a.
n.m.
7.3
5.3
na
2.0
38%
n.a.
n.m.
na Net result EPS
n.a.
5.9
4.4
na
1.5
34%
n.a.
n.m.
0.008
0.006
n.a.
0.0
34%
n.a.
n.m.
Source: Company, DnB NOR Markets Note: No consensus numbers available due to limited analyst coverage
Segment breakdown SGDm
Q1/12
Q1/12e
Reported DnB NOR
Q1/12 Rep. vs DnB NOR Cons*
Abs.
%
Rep. vs Market Abs.
%
Revenue breakdow n Shipbuilding Conventional Shipping Offshore Shipping
15
18
na
-2.5
-14%
na
na
0
0
na
0.0
na
na
na
20
22
na
-2.1
-10%
na
na
EBITDA breakdow n* Shipbuilding
5
4
na
0.9
26%
na
na
Conventional Shipping
0
0
na
0.0
na
na
na
11
10
na
0.9
9%
na
na
29%
20%
na
0.1
47%
na
na
na
na
na
n.a.
na
na
na
56%
46%
na
0.1
20%
na
na
Offshore Shipping
EBITDA m argin Shipbuilding Conventional Shipping Offshore Shipping
Source: Company, DnB NOR Markets Note: EBITDA/EBIT figures are derived from our calculations of disclosed profit after tax for each division
DnB NOR Markets - 2
Q1 2011/12 results update > Jaya Holdings
Better cost control of newbuilds allows for competitive pricing The sale of one vessel in Q1, which we believe was a 5,150bhp AHTS, was as we expected, but the USD12.5m sale price was 10% below our USD14m forecast. We attribute this to lower construction costs for the vessel (note that margins in the Shipbuilding segment exceeded our estimates), allowing for competitive pricing. Vessel disposals in Q1 2011/12 Vessel Name
Type
Bhp/dwt
Built
% Prior ownership
Status
AHTS newbuild 5
AHTS
5,150 BHP
2011
100%
Newbuild
Source: DnB NOR Markets, Company
Dayrates stable in Q1, with better revenue efficiency The Chartering segment posted revenues of SGD20m (our estimate SGD22m) and EBITDA of SGD11m (our estimate SGD10m). Chartering fleet utilisation was 68% in Q1 2011/2012, below our forecast of 73%, due to the addition of six newbuild vessels to its fleet. Vessels added to chartering fleet in Q1 2011/2012 Vessel Name AHTS newbuild AHTS newbuild AHTS newbuild AHTS newbuild AHTS newbuild AHTS newbuild
Type AHTS AHTS AHTS AHTS AHTS AHTS
6 7 8 13 14 15
Bhp/dwt 5,150 BHP 5,150 BHP 5,150 BHP 8,000 BHP 8,000 BHP 8,000 BHP
Built 2011 2011 2011 2011 2011 2011
% Ownership 100% 100% 100% 100% 100% 100%
Status Newbuild Newbuild Newbuild Newbuild Newbuild Newbuild
Source: DnB NOR Markets, Company
Average dayrates and utilisation Average utilisation rates
Average dayrates (SGD)
16,000
100% 90%
14,000
80%
12,000
SGD/day
08.11.2011
70%
10,000
60%
8,000
50% 40%
6,000
30%
4,000
20%
2,000
Q112
Q411
Q311
Q211
Q111
Q410
Q310
Q210
Q110
Q409
Q309
Q209
Q109
Q408
Q308
Q208
Q108
Q407
Q307
Q207
Q107
Q406
Q306
Q206
Q106
-
10% 0%
Financial year
Source: Company, DnB NOR Markets
We are positive on the supply/demand outlook for OSVs and expect Jaya's fleet to benefit from this. As stated, Jaya is looking to move towards increasing its charter fleet to build up a stable earnings base. Remaining capex Based on our estimates, the remaining capex of its existing newbuild programme is approximately USD191m (SGD239m).
DnB NOR Markets - 3
08.11.2011
Q1 2011/12 results update > Jaya Holdings
Estimated capex remaining 2011e
Type AHTS AHTS AHTS AHTS AHTS PSV ROV support Barges Total
Size 5,150 8,000 10,000 12,000 16,000 3,000 300m 10,000
Est cost per vessel (USDm) 11 20 23 28 38 19 12 25
Key capex assumptions Total capex Total capex Current commitments (stk WIP)
No of newbuilds 0 1 0 0 0 0 1 1 3
Est capex/cost (USDm) 0 40 0 112 76 38 24 0 290
No of newbuilds 0 2 0 4 2 2 2 0 12
Remarks Based on expected newbuild cost Converted to SGD Based on reported Q1FY2012 WIP newbuilds
USD347m SGD434m SGD195m
Outstanding capex
2012-14e
Est capex/cost (USDm) 0 20 0 0 0 0 12 25 57
SGD239m
For remaining FY2012-FY2014 (financial year)
Source: DnB NOR Markets
Balance sheet position With current net debt of USD72m as of the Q1 2011/12 release, shortterm borrowing of USD23m, long-term debt of USD235m, cash of USD187m, and a fair value (our estimate) of USD508m for its chartering fleet, we believe Jaya is able to meet its debt obligations and remaining capex commitment. Management outlook Management is seeing positive signs of improving demand and utilisation, although charter rates remain soft, as the market is still absorbing excess tonnage. This is generally in line with our outlook, and increasing demand from various markets (Vietnam, Malaysia, Thailand, Indonesia and the Middle East) is expected to drive utilisation and eventually dayrates. Estimate revisions We have revised our estimates largely on the basis of: 1) the Q1 2011/12 reported numbers; 2) forecast earnings contributions from the six newbuilds added to the chartering fleet; and 3) reduced contributions in the Shipbuilding segment, due to the transfer of the six newbuilds. The net impact on EPS is -23% for 2011/12e, -9% for 2012/13e and -8% for 2013/14e. Estimate revisions SGDm n
New estim ates
Old estim ates
Change
2012E
2013E
2014E
2012E
2013E
2014E
2012E
2013E
2014E
246
655
486
295
698
541
-49
-43
-55
67
146
119
80
157
128
-13
-10
-9
27%
22%
25%
27%
22%
24%
0%
0%
1%
EBIT
40
116
89
53
130
98
-13
-13
-9
Net finance
-5
-5
-4
-7
-6
-6
2
2
2
Pretax earnings
34
112
84
46
123
92
-12
-12
-7
Net result including gains on vesse
29
93
70
38
102
76
-10
-10
-6
0.04
0.12
0.09
0.05
0.13
0.10
-0.013
-0.012
-0.008
-25%
-9%
-8%
Operating revenues EBITDA EBITDA margin
EPS EPS change %
Source: DnB NOR Markets
DnB NOR Markets - 4
08.11.2011
Q1 2011/12 results update > Jaya Holdings
Key assumptions for Shipbuilding segment Revised estimates Key assumptions for Shipbuilding segment
Q1/12e Q2/12e Q3/12e Q4/12e
2012E
2013E
2014E
11 -2 75
11 -4 132
2 -9 336
0 -2 65
2 0 44 0
7 0 232 0
9 0 276 0
14 -7 449 201
14 -10 463 295
0 0
0 0
0 0
0 0
0 0
0 0
38 20% 8
19 20% 4
75 20% 15
132 20% 26
537 20% 107
360 20% 72
2012E
2013E
2014E
Existing order backlog (15 WIP vessels as of Q1 FY2012): Est outstanding units in WIP existing order book for sale (unit) Expected no of completed vessels sold from existing orderbook (unit) Est value of vessels sold from existing orderbook (SGDm): A
15 -1 16
14 -1 38
13 -1 19
New vessels assumed for continual newbuild plan (own yard): Est new vessel orders for internal newbuild plan (unit) Expected no of completed vessels sold from new vessel orders (unit) Est value of vessels from new orders (SGDm) Value of vessels sold from new orders (SGDm): B
0 0 0 0
0 0 0 0
Vessels transferred to chartering fleet Vessels sold from current chartering fleet
6 0 16 3
Total revenues (A + B) EBITDA margins assumption EBITDA (SGDm) Previous estimates Key assumptions for Shipbuilding segment
Q1/12e Q2/12e Q3/12e Q4/12e
Existing order backlog (30 WIP vessels as of Q4 FY2010): Est outstanding units in WIP existing order book for sale (unit) Expected no of completed vessels sold from existing orderbook (unit) Est value of vessels sold from existing orderbook (SGDm): A
21 -1 18
20 -1 38
18 -2 52
15 -3 96
15 -7 205
40 -11 390
0 -4 133
New vessels assumed for continual newbuild plan (own yard): Est new vessel orders for internal newbuild plan (unit) Expected no of completed vessels sold from new vessel orders (unit) Est value of vessels from new orders (SGDm) Value of vessels sold from new orders (SGDm): B
0 0 0 0
0 0 0 0
2 0 49 0
7 0 244 0
9 0 292 0
14 -7 473 214
14 -10 487 310
Vessels transferred to chartering fleet Vessels sold from current chartering fleet
0 0
0 0
0 0
0 0
0 0
0 0
0 0
18 3
38 20% 8
52 20% 10
96 20% 19
205 20% 41
604 20% 121
443 20% 89
Total revenues (A + B) EBITDA margins assumption EBITDA (SGDm)
Source: DnB NOR Markets
Segment estimate breakdown New estim ates Revenue breakdow n Shipbuilding Conventional Shipping Offshore Shipping
Q1/11
Q4/11
2011E
Q1/12
Q2/12e
Q3/12e
Q4/12e
2012E
2013E
2014E
60
0
0
0
60
15
38
19
75
148
537
360
0
Q2/11 0
Q3/11 0
0
0
0
0
0
0
0
0
0
18
15
18
17
67
20
23
27
28
99
118
126
0
25
31
107
EBITDA breakdow n Shipbuilding Conventional Shipping Offshore Shipping
25
0
0
5
8
0
0
0
0
0
0
0
0
0
0
0
0
11
8
9
10
37
11
8
12
4
13
15
43
48
56
72
30
106
EBIT breakdow n Shipbuilding
24
0
0
0
24
4
7
4
15
Conventional Shipping
0
0
0
0
0
0
0
0
0
0
0
0
Offshore Shipping
5
1
2
3
12
4
1
5
6
16
19
27
71
Q1/11
Q2/11
Q3/11
Old estim ates Revenue breakdow n Shipbuilding Conventional Shipping Offshore Shipping
Q4/11
2011E
Q1/12e
Q2/12e
Q3/12e
Q4/12e
2012E
2013E
2014E
60
0
0
0
60
18
38
52
96
205
604
443
0
0
0
0
0
0
0
0
0
0
0
0
18
15
18
17
67
22
22
23
23
90
94
98
0
25
8
10
19
41
121
89
EBITDA breakdow n Shipbuilding Conventional Shipping Offshore Shipping
25
0
0
0
0
0
0
0
0
0
0
0
0
0
0
11
8
9
10
37
10
4
11
11
11
44
41
45
40
120
88
EBIT breakdow n Shipbuilding
24
0
0
0
24
3
7
10
19
Conventional Shipping
0
0
0
0
0
0
0
0
0
0
0
0
Offshore Shipping
5
1
2
3
12
4
4
5
5
18
15
15
Source: DnB NOR Markets, company Please note the EBITDA/EBIT estimates have excluded common expenses
Our lowered estimates are not a function of weaker business fundamentals, but rather the timing of earnings recognition for the newbuilds added to the chartering fleet. The earnings (chartering income) capacity of the six newbuilds would now stretch over their useful life (generally 25 years), instead of one lump-sum recognition, if they are sold. As mentioned in previous reports, Jaya intends to increase its business mix in the Chartering segment by streamlining its fleet, moving newbuilds to the chartering fleet, and disposing of older assets. However, we have yet to factor into our estimates the potential chartering income contribution from the newbuilds, due to the limited information on which newbuilds will eventually be put in the chartering fleet.
DnB NOR Markets - 5
08.11.2011
Q1 2011/12 results update > Jaya Holdings
For now, given that the shift to higher chartering exposure will take time (fleet optimisation, securing contracts), Jaya’s build-to-sell OSV yard business model is likely to continue to make earnings volatile. Its yard business model is to build vessels for sale, unlike conventional shipyards that build to order. Hence, the timing of vessel sales (earnings recognised when vessels are sold, instead of the industry norm of percentage completion), is the key variable in driving earnings. This segment is extremely cyclical and geared towards the offshore cycle. We thus reiterate that it is challenging to model estimates for Jaya due to the complexity and number of fleet changes (disposals and newbuild additions). We also expect vessel sales from its chartering fleet, for fleet optimisation reasons. These would not be recognised in the Shipbuilding segment, but rather as gains or losses on disposal.
Valuation and recommendation We are positive on Jaya because of: 1) its intent to shift more weight to its Chartering segment, which could put it on the M&A radar screen of offshore companies; 2) the higher margins and earnings upside in its Chartering segment, given the room for utilisation growth; 3) its relatively strong balance sheet; and 4) the undemanding market-implied valuations of its fleet. We value Jaya on the NAV of its fleet, and our fair value is SGD0.98. Due to its business model, we argue that the valuation should be based on the aggregate NAV of its fleet (chartering and newbuilds planned). Jaya is trading on a steep discount to our NAV, presenting an attractive risk/reward payoff. We reiterate our BUY recommendation and SGD0.90 NAV-based target price.
DnB NOR Markets - 6
08.11.2011
Q1 2011/12 results update > Jaya Holdings
Fleet NAV – SGD0.98/share Current fleet as of Q3 FY2011
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29
Vessel Name JAYA SEAL JAYA TREASURE 2 NOR SPRING NOR CAPTAIN Jaya Concordia DJM Fortune 3 JAYA DEFENDER(887C) JAYA AMANDAM JAYA AMARA(HT06-2014) Sea Haw k 1 JAYA DAUPHIN JAYA PUFFIN 2 Jaya 300 DJM Fortune 5 Jaya 301 Jaya 302 Jaya Installer 9 - 400pax JAYA SCOUT JAYA MERMAID 3 Jaya Chieftain AHTS new build 10 - Jaya Cavalier Jaya Almighty Jaya Conqueror AHTS new build 6 AHTS new build 7 AHTS new build 8 AHTS new build 13 AHTS new build 14 AHTS new build 15 Total
Type AHTS AHTS AHTS AHTS AHTS AHTS AHTS AHTS AHTS AHTS AHTS Utility support Deck cargo bar AHTS Deck cargo bar Deck cargo bar Accom barge AHTS AHT AHTS AHTS AHTS AHTS AHTS AHTS AHTS AHTS AHTS AHTS
Bhp/dwt 5,500 BHP 5,150 BHP 7,956 BHP 10,880 BHP 8,000 BHP 4750 BHP 10,800 BHP 4,800 BHP 4,800 BHP 12,000 BHP 10,800 BHP 3,500 BHP 9,000 DWT 4750 BHP 9,000 DWT 9,000 DWT 9,954 DWT 4,750 BHP 5,150 BHP 8160 BHP 8,000 BHP 5,150 BHP 8,000 BHP 5,150 BHP 5,150 BHP 5,150 BHP 8,000 BHP 8,000 BHP 8,000 BHP
Built 2004 2005 2008 2007 2010 2004 2009 2009 2009 2010 2009 2004 2007 2004 2007 2007 2010 2004 2007 2010 2010 2010 2010 2011 2011 2011 2011 2011 2011
% Ownership 100% 100% 100% 100% 100% 0% 100% 100% 100% 100% 100% 100% 100% 0% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Status Time charter Time charter Bareboat Bareboat Available Managed Time charter Transition Spot New build Time charter Transition Jetty Managed Jetty Transition Bareboat Operating Bareboat Available Available Operating Available New build New build New build New build New build New build
Sales USDSGD NAV (USDm) leaseback ex 12 No 1.22 12 No 1.22 24 No 1.22 28 No 1.22 25 No 1.22 8 No 1.22 30 No 1.22 9 No 1.22 9 No 1.22 35 No 1.22 30 No 1.22 8 No 1.22 5 No 1.22 8 No 1.22 5 No 1.22 5 No 1.22 35 No 1.22 9 No 1.22 10 No 1.22 25 No 1.22 25 No 1.22 12 No 1.22 25 No 1.22 13 No 1.22 13 No 1.22 13 No 1.22 25 No 1.22 25 No 1.22 25 No 1.22
Net ownership (SGDm) 15 15 29 34 31 0 37 11 11 43 37 10 6 0 6 6 43 11 12 31 31 15 31 16 16 16 31 31 31 600
Status New build New build New build New build New build New build New build New build New build New build New build New build New build New build New build
Sales USDSGD NAV (USDm) leaseback ex 25 No 1.22 25 No 1.22 25 No 1.22 35 No 1.22 35 No 1.22 35 No 1.22 35 No 1.22 45 No 1.22 45 No 1.22 22 No 1.22 22 No 1.22 15 No 1.22 15 No 1.22 15 No 1.22 30 No 1.22
Net ownership (SGDm) 31 31 31 43 43 43 43 55 55 27 27 18 18 18 37 517
Current newbuild vessels earmarked for sale
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Vessel Name AHTS new build 16 AHTS new build 18 AHTS new build 19 AHTS new build 22 AHTS new build 23 AHTS new build 24 AHTS new build 25 AHTS new build 26 AHTS new build 27 PSV new build 2 PSV new build 3 ROV support newbuild 1 ROV support newbuild 2 ROV support newbuild 3 Barge newbuild 4 Total
Type AHTS AHTS AHTS AHTS AHTS AHTS AHTS AHTS AHTS PSV PSV ROV ROV ROV Barge
Bhp/dwt 8,000 BHP 8,000 BHP 8,000 BHP 12,000 BHP 12,000 BHP 12,000 BHP 12,000 BHP 16,000 BHP 16,000 BHP 3,000 dw t 3,000 dw t 300m depth 300m depth 300m depth 9,954 DWT
NAV Calculation NAV of all vessels NAV of yard Total assets FY2011 NIBD + future discounted capex & newbuilds' costs Net value of all assets No of outstanding shares Equity value per share (SGD)
Expected delivery % Ownership 2011 100% 2012-2013 100% 2012-2013 100% 2012-2013 100% 2012-2013 100% 2012-2013 100% 2012-2013 100% 2012-2013 100% 2012-2013 100% 2012-2013 100% 2012-2013 100% 2011 100% 2011 100% 2012-2013 100% 2011 100%
SGDm 1118 27 1145 390 755 770 0.98
Method FMV 1x book value as of FY2010 Incl remaining cost to complete the outstanding new build plan
Source: DnB NOR Markets, company
DnB NOR Markets - 7
Q1 2011/12 results update > Jaya Holdings
IMPORTANT INFORMATION
Company: Coverage by Analyst: Date:
Jaya Holdings Kay Lim 11/8/2011
This report has been prepared by DnB NOR Markets, a division of DnB NOR Bank ASA. DnB NOR Bank ASA is a part of the DnB NOR Group. This report is based on information obtained from public sources that DnB NOR Markets believes to be reliable but which DnB NOR Markets has not independently verified, and DnB NOR Markets makes no guarantee, representation or warranty as to its accuracy or completeness. Any opinions expressed herein reflect DnB NOR Markets’ judgement at the time the report was prepared and are subject to change without notice. The report is planned updated minimum every quarter.
Recommendation structure and risk classification DnB NOR Markets recommendations are based on absolute performance: - indicates an expected return greater than 10% within 12 months - indicates an expected return between 0 and 10% within 12 months - indicates an expected negative return within 12 months
Buy Hold Sell
The return-requirement bands above may be applied with some degree of flexibility depending on the liquidity and volatility characteristics of the individual share. High risk Medium risk Low risk
- Volatility over 40 percent. - Volatility from 25 percent to 40 percent. - Volatility under 25 percent.
Current 6 months volatility rates this security as MEDIUM risk. Investing in any security is subject to substantial risk. Return on investment may vary greatly. Price targets are based on a combination of several valuation methods such as discounted cash flow, pricing based on earnings multiples, multiple on book value, net asset value and peer comparison. Substantial material sources for coverage of this company include historical financial figures and communication with the company, and relevant third party information. Recommendations and historical target prices below may not compile all recommendations by DnB NOR Markets, for further information please contact DnB NOR Markets.
Price, Rating, and Price Target History Jaya Holdings (JAYA SP) as of 8-11-11
3-3-11 B:1
17-10-11 B:1
1.1 1.0 0.9 0.8 0.7 0.6 0.5 0.4 28-2-11
30-3-11
30-4-11
30-5-11
30-6-11
30-7-11
30-8-11
29-9-11
30-10-11
29-11-11
Source: Factset Estimates (Prices) / DNB NOR(ratings and target price)
Conflict of interest Share positions in the company: Number of shares
Analyst 0
Employees* 0
DnB NOR** 0
Update 11/7/2011
*Share positions does not include administration and section FX/Treasury.**Share positions as part of DnB NOR Group. Holdings as part of DnB NOR Markets investment services activity are not included.
Recommendation distribution and corporate clients Buy Hold Number 117 35 % of total 70% 21% DnB NOR Markets client 17% 2%
Sell 12 7% 0%
No rec 3 2% 2%
Total 167 35
DnB NOR Markets - 8
Q1 2011/12 results update > Jaya Holdings
Legal statement The analyst hereby certifies that (i) the views expressed in this report accurately reflect that research analyst’s personal views about the company and the securities that are the subject of this report, and (ii) no part of the research analyst’s compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in this report. DnB NOR Markets employees, including research analysts, may receive compensation that is generated by overall firm profitability. Confidentiality rules and internal rules restricting the exchange of information between different parts of DnB NOR Markets/DnB NOR Bank ASA or the DnB NOR Group may prevent employees of DnB NOR Markets who are preparing this report from utilizing or being aware of information available in the DnB NOR Group which may be relevant to the recipients’ decisions. DnB NOR Markets and the DnB NOR Group have incorporated internal rules and regulations in order to avoid any potential conflicts of interest. This report is for clients only, and not for publication, and has been prepared for information purposes only by DnB NOR Markets - a division of DnB NOR Bank ASA registered in Norway number NO 984 851 006 (the Register of Business Enterprises) under supervision of the Financial Supervisory Authority of Norway (Finanstilsynet), the Monetary Authority of Singapore, the Chilean Superintendent of Banks, and on a limited basis by the Financial Services Authority of UK. It is issued subject to the General Business Terms for DnB NOR Markets and information about the terms is available at www.dnbnor.no. For requests regarding the General Business Terms of the Singapore branch of DnB NOR Bank ASA, please contact +65 6212 0753. Information about the DnB NOR Group can be found at www.dnbnor.com. DnB NOR Markets is a member of The Norwegian Securities Dealers Association, which has issued recommendations and market standards for securities companies. The Association's Internet address where the recommendations and market standards can be found is: www.nfmf.no. This report is not an offer to buy or sell any security or other financial instrument or to participate in any investment strategy. No liability whatsoever is accepted for any direct or indirect (including consequential) loss or expense arising from the use of this report. Distribution of research reports is in certain jurisdictions restricted by law. Persons in possession of this report should seek further guidance regarding such restrictions before distributing this report. Please contact DnB NOR Markets at +47 22 94 82 72 for further information and inquiries regarding this report, such as ownership positions and publicly available/commonly known corporate advisory performed by DnB NOR Markets etc, in relation to the Norwegian Securities Trading Act 2007/06/29 no. 75 and the Norwegian Securities Trading Regulation 2007/06/29 no. 876. Additional information for clients in Singapore This report has been distributed by the Singapore branch of DnB NOR Bank ASA. It is intended for general circulation and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should seek advice from a financial adviser regarding the suitability of any product referred to in this report, taking into account your specific financial objectives, financial situation or particular needs before making a commitment to purchase any such product. Recipients of this report should note that, by virtue of their status as “accredited investors” or “expert investors”, the Singapore branch of DnB NOR Bank ASA will be exempt from complying with certain compliance requirements under the Financial Advisers Act, Chapter 110 of Singapore (the “FAA”), the Financial Advisers Regulations and associated regulations there under. In particular, it will be exempt from: - Section 27 of the FAA (which requires that there must be a reasonable basis for recommendations when making recommendations on investments). Please contact the Singapore branch of DnB NOR Bank ASA at +65 6212 0753 in respect of any matters arising from, or in connection with, this report. We, the DnB NOR Group, our associates, officers and/or employees may have interests in any products referred to in this report by acting in various roles including as distributor, holder of principal positions, adviser or lender. We, the DnB NOR Group, our associates, officers and/or employees may receive fees, brokerage or commissions for acting in those capacities. In addition, we, the DnB NOR Group, our associates, officers and/or employees may buy or sell products as principal or agent and may effect transactions which are not consistent with the information set out in this report. In the United States Each research analyst named on the front page of this research report, or at the beginning of any subsection hereof, hereby certifies that (i) the views expressed in this report accurately reflect that research analyst’s personal views about the company and the securities that are the subject of this report; and (ii) no part of the research analyst’s compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in this report. This report is being furnished upon request and is primarily intended for distribution to “Major U.S. Institutional Investors” within the meaning of Rule 15a-6 of the U.S. Securities and Exchange Commission under the Securities Exchange Act of 1934. To the extent that this report is being furnished, or will be disseminated, to non-Major U.S. Institutional Investors, such distribution is being made by DnB NOR Markets, Inc., a separately incorporated subsidiary of DnB NOR that is a U.S. broker-dealer and a member of the Financial Industry Regulatory Authority and the Securities Investor Protection Corporation. Any U.S. recipient of this report seeking to obtain additional information or to effect any transaction in any security discussed herein or any related instrument or investment should call or write DnB NOR Markets, Inc., 200 Park Avenue, New York, NY 10166-0396, telephone number 212-681-3800 or fax 212-681-4130. In Canada This email, and any materials attached with it, has been distributed in reliance on the International Dealer Exemption pursuant to NI 31103 subsection 8.18(2) and subsection 8.18(4)(b). Please be advised that: 1. DnB NOR Bank ASA (DnB NOR Markets) and DnB NOR Markets, Inc. are not registered in Canada. 2. DnB NOR Bank ASA (DnB NOR Markets) and DnB NOR Markets, Inc's jurisdiction of residence is Norway and the United States, respectively. 3. The name and address of the agent for service of process for DnB NOR Bank ASA (DnB NOR Markets) and DnB NOR Markets, Inc. in the local jurisdiction is: Alberta: Blake, Cassels & Graydon LLP, Attention: Pat Finnerty/Ross Bentley, 855 – 2nd Street S.W., Suite 3500, Bankers Hall East Tower, Calgary, AB T2P 4J8. British Columbia: Blakes Vancouver Services, Inc., 595 Burrard Street, P.O. Box 49314, Suite 2600, Three Bentall Centre, Vancouver, BC V7X 1L3. Labrador: Stewart McKelvey, Cabot Place, 100 New Gower Street, Suite 1100, P.O. Box 5038, St. John’s, NL A1C 5V3. Manitoba: Aikins, MacAulay & Thorvaldson LLP, 30th Floor, Commodity Exchange Tower, 360 Main Street, Winnipeg, MB R3C 4G1. Newfoundland: Stewart McKelvey, Cabot Place, 100 New Gower Street, Suite 1100, P.O. Box 5038, St. John’s, NL A1C 5V3. New Brunswick: Stewart McKelvey, 10th Floor, Brunswick House, 44 Chipman Hill, Saint John, NB E2L 4S6. Nova Scotia: Stewart McKelvey, Purdy’s Wharf Tower One, 1959 Upper Water Street, Suite 900, P.O. Box 997, Halifax, NS B3J 2X2. Ontario: Blakes Extra-Provincial Services Inc., Suite 2800, 199 Bay Street, Toronto, Ontario M5L 1A9. Prince Edward Island: Stewart McKelvey, 65 Grafton Street, Box 2140, Charlottetown, PE C1A 8B9. Quebec: Services Blakes Quebec Inc., 600 de Maisonneuve Boulevard Ouest, Suite 2200, Tour KPMG, Montreal, QC H3A 3J2. Saskatchewan: MacPherson, Leslie & Tyerman LLP, 1500 Continental Bank Building, 1874 Scarth Street, Regina, SK S4P 4E9. Northwest Territories: Gerald Stang, Suite 201, 5120-49 Street, Yellowknife, NT X1A 1P8. Yukon: Grant Macdonald, Macdonald & Company, Suite 200, Financial Plaza, 204 Lambert Street, Whitehorse, YK Y1A 3T2. Nunavut: Terry Gray, P.O. Box 1779, Building 1088C, Iqaluit, NU X0A0H0. 4. There may be difficulty enforcing legal rights against DnB NOR Bank ASA (DnB NOR Markets) and DnB NOR Markets, Inc. because each is a resident outside of Canada and all or substantially all of their assets may be situated outside of Canada.
DnB NOR Markets - 9
Q1 2011/12 results update > Jaya Holdings VALUATION EPS EPS adj Dividend ps Book per share Year end shares Price P/E P/E adj Dividend yield P/Book EV/EBITDA adj EV/EBIT adj EV/Cap employed
SGD SGD SGD SGD Millions SGD X X % X X X X
2009 0.00 0.00 0.00 0.49 770.1 0.35 nm nm 0.0 0.7 10.6 16.1 0.7
2010 0.13 0.13 0.00 0.62 770.1 0.68 5.0 5.0 0.0 1.1 7.1 8.9 0.8
2011 0.11 0.11 0.00 0.73 770.1 0.59 5.4 5.4 0.0 0.8 9.2 16.7 0.6
2012e 0.04 0.04 0.00 0.76 770.1 0.45 12.0 12.0 0.0 0.6 7.0 11.8 0.5
2013e 0.12 0.12 0.00 0.88 770.1 0.45 3.7 3.7 0.0 0.5 2.9 3.7 0.4
2014e 0.09 0.09 0.00 0.97 770.1 0.45 4.9 4.9 0.0 0.5 2.6 3.5 0.3
MARGINS, GROWTH EBITDA margin Pre-tax margin EBITDA growth EPS growth ROE ROCE adj Equity/total assets Net debt/equity
& GEARING % 18.9 % 8.1 % -57.8 % -99.2 % 0.3 % 4.4 % 37.9 % 71.3
26.2 19.7 88.1 8577.1 24.3 8.9 47.6 31.5
45.3 21.1 -38.4 -19.2 16.1 3.6 57.2 15.7
27.2 14.0 16.2 -65.9 5.0 4.4 60.6 22.5
22.3 17.1 118.4 224.9 14.6 12.1 63.5 13.6
24.5 17.4 -18.6 -24.6 9.8 8.7 68.5 nm
2010 357 0 -263 94 19 75 2 -6 0 70 19 0 104
2011 127 0 -70 58 26 32 2 -6 0 27 17 0 84
2012e 246 0 -179 67 27 40 0 -5 0 35 5 0 29
2013e 655 0 -509 146 30 116 0 -5 0 112 19 0 93
2014e 486 0 -367 119 31 89 0 -4 0 84 14 0 70
43 31
48 107
56 72
55.4
43.1
40.6
44.5
PROFIT & LOSS SGDm Revenues Other income Operating costs EBITDA Depreciation & amortisation EBIT Associated companies Net interest Extraordinary items Pre-tax profit Tax Minority interest Net profit
Reporting Q2 2012
Management CEO CFO
Chan Mun Lye Thai Kum Foon
Address Jaya Holdings 13 Tuas Crescent H.p.: www.jayaholdings.com Tel +65 6265 1010 Share structure Shr(m) 770 Voting shares 0.0 Non-voting shares 770 Tot. outstand. shares
100% 0% 100%
Share change
SGD
Shares
Ownership 08/11/11 CATHAY AM AND CONSOR FIDELITY MANAGEMEN CHEYNE CAPITAL MAN PYN RAHASTOYHTIO LAI CHEONG KHONG MUN LYE CHAN GRANTHAM MAYO VAN OT FOOK KONG CHAN Other Total Est. free float
422 77.2 38.5 12.3 6.8 5.2 2.8 2.5 203 770 266
55% 10% 5% 2% 1% 1% 0% 0% 26% 100% 35%
2009 263 0 -213 50 17 33 2 -14 0 21 7 0 1
BUSINESS SEGMENTS & ASSUMPTIONS EBITDA Offshore Shipp SGD 28 Shipbuilding SGD 14 Conventional SSGD 1 EBITDA Offshore Shipp % 31.5 EBITDA margin EBIT margin PTP margin Net margin Backlog
38 64 0 58.8
Affiche titre 37 25
CASH FLOW SGDm Cash earnings Working capital Investments Debt Equity/dividends Change in cash & liquids
18 -62 25 166 12 159
123 -5 0 -10 0 108
110 -5 -38 -41 0 25
56 57 -158 -13 0 -57
123 30 -113 -26 0 14
101 62 -42 -17 0 103
BALANCE SHEET SGDm Intangible assets Operating assets Associated companies Other current assets Cash & cash equivalents Total assets Equity & minority interest Interest bearing debt Non interest bearing debt Total liabilities & equity Net interest bearing debt
4 391 7 486 102 990 375 370 245 990 268
0 375 7 413 209 1,005 479 360 167 1,005 151
0 388 7 352 231 977 559 319 99 977 88
3 515 7 271 173 969 588 306 76 969 132
3 599 7 275 187 1,071 681 280 110 1,071 93
3 611 7 185 290 1,096 751 263 82 1,096 -27
