PACC Offshore Services Holdings Ltd. and its subsidiaries (the“Group”)
An international operator of offshore support vessels. The Group has a diversified fleet comprising various vessel types, including Anchor Handling Tugs, Platform Supply Vessels and Semi -Submersible Accommodation Vessels.The Group’s diversified fleet supports the offshore oilfield operations of oil companies and offshore EPC contractors, during the exploration, production, construction and maintenance and decommissioning phases of the offshore oilfield life cycle.
The Group operates globally in Latin America, Europe, Middle East and Africa, as well as in Asia Pacific regions.The Group provides anchor handling, towing and supply logistic services, offshore accommodation and warehousing services, and transport, installation, hook up and commissioning services. In addition, the Group provides harbour towage and floating heavy-lift services to ports and shipyards, and marine salvage and oil spill response services to the shipping communities.The Group operates in the following segments: Offshore Supply Vessels, Transportation and Installation, Offshore Accommodation and Harbour Services and Emergency Response.
We initiate coverage on PACC Offshore Services Holdings (POSH) with a BUY recommendation and target price of
S$1.36. Being the largest Asia-based provider of offshore support vessels and the youngest midwater/deepwater fleet of AHTS/PSV globally gives POSH the competitive edge. POSH’s strategy is to be market leader in several niches, and with minimal exposure to competitive shallow water spaces. With the delivery of two semisubmersible accommodation vessels by end-2014, FY15 will be a game changer for POSH, whereby Group’s earnings base is expected to double from that in FY14. Key near-term catalysts will be:
i) Significant charter contract wins, including a contract for its second SSAV, which should provide very strong visibility for FY15 earnings;
ii) Resolution of certain near-term issues at its Mexico JV, and
iii) Better-thanexpected earnings delivery.
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