ASL Marine Holdings (ASL) turned in a good set of results amid a slowing industry. Although results were lower sequentially with lower revenue growth and impairment loss on vessels of S$3.2m, revenue rose 8.7% YoY to S$435.4m and net profit rose 17.9% to S$71.1m for FY09, meeting 96% and 94% of our full-year estimates respectively. As mentioned in our earlier reports, new order flows were minimal and this is evident from the group’s lower order book of about S$523m compared to S$582m in 3QFY09. It is good to know that demand for shiprepair and chartering are still holding up, which is good news for the relatively diversified group. The stock has risen about 30% since our last report, and though the spread between ASL and its peers has narrowed, it is still trading at abut 5x FY10F earnings compared to its peers’ average of 11x. Based on 7x FY10F core earnings (prev. 6x), we are raising our fair value estimate to S$1.18 (prev. S$1.03) for ASL Marine and our BUY rating remains.

Results largely in line with expectations. ASL Marine Holdings (ASL) turned in a good set of results amid a slowing industry. Although results were lower sequentially on the back of lower revenue growth and impairment loss on vessels of S$3.2m, revenue rose 8.7% YoY to S$435.4m and net profit rose 17.9% to S$71.1m for FY09. Shiprepair and shipchartering revenue were in line with our expectations for 4Q09, but shipbuilding revenue was lower than expected due to lower revenue recognition as certain work-in-progress had yet to reach the 10% recognition threshold during the period. Revenue and net profit met 96% and 94% of our full-year estimates respectively.

Minimal new orders, but ASL is diversified. As mentioned in our earlier reports, new order flows were minimal and this is evident from the group’s lower order book of about S$523m compared to S$582m in 3QFY09. However, this order book figure does not include eleven vessels (worth S$58m) that the group is building internally to expand its ship chartering fleet. It is encouraging that demand for shiprepair and chartering are still holding up, which is good news for the relatively diversified group (shipbuilding, repair and chartering accounted for 33.8%, 27.5% and 38.7% of FY09 gross profit respectively).

Cautiously optimistic outlook. We are cautiously optimistic on the shiprepair and chartering sectors, and believe that the medium to longer term outlook is bright. Management revealed that value per contract for the ship repair segment fell this quarter but the group repaired more vessels, hence the healthy results for this segment. The group is also expanding Batam facilities to cater to more ship repair activities and this will be completed in 3QFY10. Ship chartering, though affected by lower charter rates, still has a positive outlook due to demand from domestic infrastructure, construction and land reclamation projects and offshore oil and gas activities, amongst others.

Fair value raised to S$1.18. As guided by management, we are expecting lower but still healthy earnings for FY10, barring unforeseen circumstances. The stock has risen about 30% since our last report, and though the spread between ASL and its comparable peers has narrowed, it is still trading at about 5x FY10F earnings compared to its peers’ average of 11x. Based on 7x FY10F core earnings (prev. 6x), we are raising our fair value estimate to S$1.18 (prev. S$1.03) for ASL Marine and our BUY rating remains.