Mar[3] - Triyards (Laggard into rally)

COUNTER: Triyards Holdings

OVERVIEW:
Headquartered in Singapore, the counter is an engineering and fabrication solutions provider focused on the offshore oil & gas industry. With its experience in delivering vessels and complex projects, it has established as a front runner under the "TRIYARDS" brand in the fabrication of liftboats and other oil & gas related assets in South East Asia (SEA). It owns and operates fabrication yards in Vietnam, Singapore as well as engineering facility in Houston, US.

HIGHLIGHTS:
[1] Its FY2015 results ended by Aug 2015 saw full year revenue and profit up 2% year on year. Its latest quarter results 1Q2016 ended by Nov 2015 saw revenue jumping 38%. Excluding one off gain registered on 1Q2015, this quarter net profit actually up 30%. The significant improvement was mainly due to new projects secured in FY2015.

[2] It has healthy account book with gearing ratio ~52% (Total debt/Equity) and interest coverage at 10. The counter doesn't need to fulfill any significant loan in following one year.

[3] Its orderbook backlog rose from USD230m in FY2014 to USD464m in FY2015. By latest quarter, it has registered backlog at USD564m. These contracts were secured from diversified client base such as CPC Corp (Taiwan state-owned oil&gas company), TORI (Taiwan Ocean Research Institute) and two more from Europe countries. The management indicated intention to look for tendering opportunity in North America. It focus on fabrication of liftboat which occupies 50% of revenue.

INVESTMENT THEMES:
[1] Current price translates to undemanding valuation at PB ~0.47 and dividend yield ~2.2%. Its dividend payout has been consistent throughout current crisis period for offshore & marine sector. Current PE ~4 is undervalued considering its steady growing of orderbook which is hardly seen among its peers.

[2] Most research houses rated the counter > 0.55 based on >6x of PE. Current shares price represents 20% of growing room.

[3] IEA (International Energy Agency) cautioned that oil glut might not be recovering soon. However, it said that the market may have finally 'bottomed out' amid recent remarkable recovery in oil price. Shall investor position into offshore counters which has been suffering the headwind, Triyards might be one of the proxies with visible growth prospect yet achieving amazing execution records the tough period.

PRICE TREND:
The counter has been showing resilient price movement throughout past 6 months although oil price has hit its 10 years trough. As a laggard to recent rally among offshore counters, value hunting window is still opened.

*** Note: Same counter has been mentioned in Jul[3] @ 2015 ***