CH Offshore

[prudentbuyer]

Just wondering anyone vested? It was rumoured to be a potential takeover by Chuan Hup a couple of years ago at $1.2. At the current price of $0.55, its definitely worth a second look.

Vested.

[hkl]

Just my 2 cents worth on this company. CHO is currently trading at about 1x NTAV, and about 6x P/E based on average past 3 years earnings. Dividend payout has ranged from 20%-68% since its listing. 3 years average dividend yield of 5.08% based on latest closing price of $0.410. FCF tends to be erratic because the company has been replacing its older vessels with a newer fleet and capex has been very high in recent years.

On a side note, capex has been partially offset by its proceeds from disposals of its older vessels, and as of FY10, all 1980s built vessels have been replaced with a fleet of average 4 years old. Extent of future capex is anybody's guess but I regret not attending their AGM to understand more though.

Also for debt, taken from latest SGX FY2011 report, "Given the surplus cash position, management deemed it prudent to repay in full borrowings from banks during FY11. As a result, there were no bank loans outstanding as at 30 June 2011 as compared with US$23.750 million as at 30 June 2010."

Management has also maintained a remarkable profit margin of above 50% despite the drop in charter rates and lower demand for shipping and offshore support services.

Definitely not the cheapest stock in the market, but a very well run company with stable earnings and consistent dividends imho. Would anybody care to share their opinions on this stock?

(vested)

[karlmarx]

CHO appears to be more efficient in its operations compared to jaya, ezra, and otto.

looking at its P&L, i'm very curious as to how CHO achieves ~50% net margins in such difficult market conditions, for FY11 and FY10. especially so when their peers are struggling. anyone care to shed some light?

[kayhian]

CHO appears to be more efficient in its operations compared to jaya, ezra, and otto.

looking at its P&L, i'm very curious as to how CHO achieves ~50% net margins in such difficult market conditions, for FY11 and FY10. especially so when their peers are struggling. anyone care to shed some light?

they sold off some vessels before eurozone crisis.

in a way, they are good market-timers.

[GreedandFear]

As far as I can see, they benefit from being tax exempt on 95% of their profits (the company refers to a section under the Singapore tax code...). Note that the sale of 4 vessels was to their Indonesian associate (they own 49%) so as to get around Indonesian cabotage laws (same as what Marco Polo Marine did). As a result, share of profits of associates is growing fast. Unfortunately, the company does not give any information on who charters their vessels, for how long or how much. Hence it is impossible to predict future revenues. Red flag is a USD 40MM receivable from a client who has still to pay clearly demonstrating that this business can have significant credit risk. Otherwise, it looks like a nice little business

[camelking]

the 43m debt is still outstanding...

potential impairement???

two vessels are off-hire and under mandatory service.

Any views on this company?

Vested

[Drizzt]

they do have a fair bit of receivables which we do not know if they will be able to collect back.

the ship is on a short term on goign basis and would see their rental step down.

seems shipping is the way to go but you wonder if it will drag on further. a smart person tell me 2013 is the year shipping turns. not sure if we are seeing the signs of it.

[camelking]

CH offshore is more of a offshore marine play...
I know, 2 years ago, offshore marine was facing oversupply of vessels...not sure if this is still the case..
Can anybody enlighten me?

Ya, i do hope shipping is turning around....got a fair bit on NOL...haha

[greengiraffe]

With the emergence of shale gas (land based) - deep sea exploration could take a back seat unless oil prices see a sustained revival. If I m not wrong, the demand-supply imbalances appear to be more balance now - can read from Jaya presentations.

OSV is a niche part of shipping and is a derived demand. Due to some darling counters - Ezra and Swiber before GFC and Ezion - it seems to be an important sector. However, as it is - it is a tough industry with no absolute competitive advantages. If we look at Ezra in its present state, one can really wonder why Ezion is so special. Even Jaya is also becoming a specialised yard cum operator. Speaks so much of the status of yester-years.

As for container shipping, my view is always the same - 3 years bull with 7 years bear. NOL without GLC status is a waste of time - if STX Pan Ocean is history and First Ship Trust have so much problems - only the parentage stands out as a difference.

I have absolutely no clue on how container shipping bleeds and have no $ and interest to see scarce $ burn.

Odd Lot Vested
CHO, Ezra, Jaya, NOL

CH offshore is more of a offshore marine play...
I know, 2 years ago, offshore marine was facing oversupply of vessels...not sure if this is still the case..
Can anybody enlighten me?

Ya, i do hope shipping is turning around....got a fair bit on NOL...haha

[Nick]

With the emergence of shale gas (land based) - deep sea exploration could take a back seat unless oil prices see a sustained revival. If I m not wrong, the demand-supply imbalances appear to be more balance now - can read from Jaya presentations.

OSV is a niche part of shipping and is a derived demand. Due to some darling counters - Ezra and Swiber before GFC and Ezion - it seems to be an important sector. However, as it is - it is a tough industry with no absolute competitive advantages. If we look at Ezra in its present state, one can really wonder why Ezion is so special. Even Jaya is also becoming a specialised yard cum operator. Speaks so much of the status of yester-years.

As for container shipping, my view is always the same - 3 years bull with 7 years bear. NOL without GLC status is a waste of time - if STX Pan Ocean is history and First Ship Trust have so much problems - only the parentage stands out as a difference.

I have absolutely no clue on how container shipping bleeds and have no $ and interest to see scarce $ burn.

Odd Lot Vested
CHO, Ezra, Jaya, NOL

CH offshore is more of a offshore marine play...
I know, 2 years ago, offshore marine was facing oversupply of vessels...not sure if this is still the case..
Can anybody enlighten me?

Ya, i do hope shipping is turning around....got a fair bit on NOL...haha

My humble guess will be the nature of the business ? Ezion is primarily an offshore rig owner cum operator enabling it to derive lucrative recurring cash-flow from its long-term charter contracts. Ezra is primarily an engineering company specializing in the offshore industry with a fleet of chartered-in vessels. The cash generating abilities of both business differs. Does that make Ezion a sure bet ? Honestly, I have no idea since I never read up on liftboats & jackup rigs charter rate trends.

With regards to CHO - I think the main bug bear is the receivables issue. Firstly, an impairment will wipe out a chunk of their NAV and secondly, they will need to recharter the vessels. Personally, if rechartering at rates of similar level of profitability is a non-issue, the Management would have easily 'defaulted' from the charter contracts long ago. I could be wrong though. Let's wait and see. I don't think this will threaten its ability to survive due to the rock solid b/s.

(Not Vested in Ezion, Ezra, CHO)