Vallianz & Nam Cheong – Nurturing Valiant Growth

Both
my offshore stocks announced 2Q results this week. There is nothing too surprising
as both companies continue to achieve stellar growth year over year (yoy) at the back
of a strong offshore industry outlook.
  
Vallianz – 1H14 net profit exceeded FY13 profit
For
2Q14 comparing yoy, Vallianz doubled its net profit to US$5.8m and group
revenue surged to US$38.6m vs US$4.7m. 1H14 net profit
surge 172% to US$11.2m
on the back of 787% growth in revenue to
US$66.3m. Revenue
expansion is propelled by long-term charters with major oil companies. GP
margin healthy and stable. Overall, 1H14 net profit exceeded FY2013 net Profit.


As
of End 1H14, cash position increase to US$44.1m from US$1.8m half year ago.
Shareholders’ equity increased to US$141.5m 1H14 vs
US$42.7m End13. Total liabilities were US$598.8m 1H14, comprising largely of
loans amounting to US$361.3m to finance the purchase of vessels. The Group also
has notes payable of US$124.9m that were issued under a Multicurrency Debt
Issuance Program.
Outlook
Pros: Higher revenue and
profits in FY14. Around 50% of current order book of US$494m, expected to be
recognised over 2014 and 2015. Prospects in Middle East and Mexico bright, and
target entrance to west Africa. Tendered 1.2b of projects, with its wide range
of vessel types at a healthy average fleet age of 2.3 years.
Cons: High growth from high debt means high risk. Employees may find
difficultly to cope and output may lag exuberance growth.
  
Nam Cheong – 1H14 Net Profit surged 75% yoy
For
2Q14, Nam Cheong ‘s net profit surges 53% to RM63.0m and revenue rises 38% to
RM378.8 million qoq. Gross  profit  margins  still at healthy levels of 18% in 2Q14 although
it fall 2% yoy. For the 1H14 comparing yoy, Net profit
surged 75% to RM134.4m
vs RM76.9m and Revenue rose 54% to RM786.1m vs  RM510.1m.
Healthy
cash position of RM194.2m with low net gearing ratio of 0.60 times as at End
1H14, providing headroom for growth.  NAV
per share as of end 1H14 is 47.6 sen vs 44.6 sen as seen End13. 
Outlook
Pros: Expect another record
year with 20 out of 30 vessels due for 2014 already sold. Large
order book of approx RM1.7 billion. Bright outlook driven by Petronas increase Capex
commitment.
Cons: Risk of Build to Stock business model unable to sell in situation of an
economic crunch.
Related
Posts:

Vallianz – Request
for Trading Halt after 7% spike in price

 

Nam
Cheong – What you need to know before investing in it?

Nam
Cheong Barging Forward – Accom Work Barge Orders & Shares buybacks.

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