Wintermar Offshore Marine (WINS IJ)
Riding the charter rates upcycle; initiate with Buy
- We expect DCR to be supported by growing demand paired with supply tightness in the Gulf of Mexico, W. Africa, and S. America.
- We forecast WINS to deliver 117%/90% core EPS growth in FY24-25E through higher utilization, daily rates, and higher vessel count.
- We initiate with a Buy rating on WINS as it is attractively positioned in the cycle; our TP is Rp760 (blended of PB and PE).
Expect DCR to remain supported by constrained supply and rising demand
We anticipate that offshore support vessel (OSV) daily charter rates (DCR) will remain elevated above US$20k/day, driven by robust demand from key regions including the Gulf of Mexico, West Africa, and South America. Additionally, a tight OSV supply has led to an increase in utilization to 75% from 67% in FY21 as activity levels pick up. While the current overall utilization rate may appear moderate, taking into consideration the significant portion of idle and laid-up vessels (18% of the total fleet), we believe the effective utilization is closer to 90%, indicating a constrained market. While the SEA OSV daily charter rates have historically lagged due to lower investment activity in the region, we expect DCR to be supported at >US$20k/day in the medium term [FY24-27], driven by the emerging trend of rising oil and gas investments.
Attractively positioned in the industry, driving potential upsides in rates
WINS currently owns 6 Platform Supply Vessels (PSV). Of these, two are scheduled to begin long-term contracts in Aug24, while the remaining four are positioned for short-term contracts at more favorable spot rates. At present, only one PSV is actively engaged in a spot contract, with the other three still being prepared.
Solid FY24-25F earnings growth outlook from higher rates and utilization
We forecast a strong FY24-25F core profit growth of 117%/90%. This is expected to be driven by these vessels securing spot contracts, with rates currently exceeding US$20k/day (vs. an average of US$11.5k/day in FY23), and increased utilization to 70%. WINS is well-positioned for expansion, as its deleveraging efforts through debt repayments and asset sales since FY15 resulted in a net cash position in FY23. This offers the flexibility to acquire high-tier vessels to further leverage the current upcycle.
Initiate with a Buy rating and a TP of Rp760
We initiate coverage with a Buy rating on attractive industry position and solid earnings growth. WINS currently trades at 5.5x FY24E PE and 0.7x FY24E PBV, a discount to its regional peers. We set 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.
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