Wintermar Offshore Marine (WINS.IJ Rp 510; BUY TP Rp 760) Recently acquired WM Mentawai PSV to bolster earnings growth in 2H24 onwards

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Wintermar Offshore Marine (WINS IJ)

Recently acquired WM Mentawai PSV to bolster earnings growth in 2H24 onwards

We visited WINS’s recently acquired WM Mentawai PSV, which is currently running tests on vessel capability.
We expect stronger earnings for WINS in 2H24 and FY25 derived from higher charter rates and new vessels acquired.
We maintain a Buy rating on WINS with a TP of Rp760. Key risks include lower charter and utilization rate.

WM Mentawai PSV: further strengthening of WINS’ fleet profile

WM Mentawai PSV was built by Xiamen Shipbuilding Industry Co. Ltd. in 2022. After taking on crew transport job to a wind farm project in Taiwan, the vessel was sold to WINS in Aug24 and was delivered to Batam on 5^thSep24. In terms of size, WM Mentawai is similar to the other PSVs owned by WINS, with a capacity of 700sqm with an engine size of 6,000HP. Furthermore, WM Mentawai is equipped with dynamic positioning-2, which allows it to take on deepwater projects. Up until this moment, the ship is still docking in Batam undergoing several tests to ensure its readiness once a contract for the ship is available. Nonetheless, given the relatively young age of WM Mentawai, it should naturally be at an advantage to win tender contracts due to the better living quarter conditions and the more advanced set of control panels on the bridge. Furthermore, we observed WINS’ Sea Pollux PSV in the shipyard, still undergoing maintenance as it awaits spare parts. The company expects the vessel to be fully operational by early 2025.

Stronger 2H24 and FY25 growth is in the cards

We expect a stronger 2H24 performance derived from its 4 high tier vessels that has secured a more favorable long-term contract in 3Q24, as well as short-term contracts secured at an increasingly strong spot price. Furthermore, its latest AWB vessel should already be operating at maximum utilization, which should also boost earnings in 2H24. In FY25 onwards, we expect earnings growth to be derived from WM Mentawai and other PSVs that are waiting for new contracts in early FY25, followed by a stronger average charter rate, which has been persistently strong (currently at c.US$22-23k/day, +22% yoy).

Maintain Buy rating with a TP of Rp760

We maintain our Buy rating on attractive industry position and solid earnings growth. WINS currently trades at 4.9x FY25F PE and 0.7x FY25F PBV, a discount to its regional peers. Our valuation is based on a blended P/B ratio of 1.1x and P/E of 8.3x, slightly lower than peers due to WINS’ lower ROE of 13% (vs. peers 17%), which translates into a target price of Rp760. Key risks include lower charter and utilization rates.

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