Jaya Holdings resumes dividends for the first time in 4 years

Its interim dividend is at 0.5 Scts per share.

According to DBS, Jaya Holding's early resumption of dividends draws a positive surprise. Jaya generated ~US$94m cash from the sale/disposal of 3 vessels in 2Q13. Along with the recent refinancing of its scheme debt, Jaya had net cash of 4.3Scts/share as of end 2012. With a robust balance sheet, the group declared its first interim dividend in 4 years of 0.5 Scts per share.

Here's more:

While we had expected a resumption of dividends, this came earlier than expected, and is positive. Management alluded that it is hoping to maintain a steady DPS going forward, as such, we have now imputed an annual DPS of 1.0 Scts from FY13 onwards.

Impairment charge a drag on an otherwise good quarter. 2QFYJune13 revenue jumped >7x, within expectations, mainly from higher vessel sales (2Q13: 2 units vs. 2Q12: nil).

However, core PATMI of US$6.5m (+553% y-o-y) was below as the Offshore Engineering division posted a US$1.3m impairment charge on cost overruns relating to the 16,000BHP AHTS delivered in Nov 2012. Offshore Support performed within expectations, with division PATMI of US$8.1m (ex disposal gain of US$0.2m for one vessel), translating to a healthy 32% net charter margin.

New charter secured. Separately, Jaya also announced the award of a term charter of its latest delivery, Jaya Pride, a maintenance workboat from Belait Offshore. This will add to its US$180m charter backlog as of end 2012. Stay invested for the longer term recovery, BUY. Due to the monsoon season (Oct to March), 2Q13 fleet utilisation rates fell 4ppts q-o-q to 80%.

We expect a further drop of 8ppts in 3Q13 utilisation rate as several vessels are affected by the enforcement of Carbotage rules in Indonesia. We have trimmed our FY13F by 19% for the weak 2Q and expected weaker 3Q; while FY14F remains intact.

Despite these near term issues, we remain optimistic of the longer term recovery as growth in the global offshore rig fleet continues to outstrip the OSV fleet.

Maintain BUY with TP unchanged at S$0.85, pegged to 1x blended FY13/14F P/BV (prev 1x FY13 P/BV).

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