SINGAPORE (April 10): OCBC Investment Research on Monday says it is keeping its “hold” call on Triyards Holdings pending more clarity on the impact from Ezra Holdings.
Triyards sank into losses of US$4.2 million ($5.9 million) and US$6.3 million in 1H17 and 2Q17 ended February, respectively, after making a total allowance of US$8.4 million in doubtful receivables.
Triyards said in an SGX on April 7 that “these arise from related entities of parent company Ezra Holdings which are either facing a potential going concern issue or have filed for Chapter 11 of the United States Bankruptcy Code.”
(See: Triyards sinks into losses in 2Q after recording Ezra-linked allowance in doubtful receivables)
“The group’s net order book stands at about US$321 million, though we note that about US$175 million of this relates to two un-built liftboats for Ezion that are at risk of cancellation or indefinite deferment,” says OCBC lead analyst Low Pei Han in a Monday report.
Triyards also has four more liftboats that are at advanced stages of completion, with deliveries in the next six months.
“Meanwhile, the group also announced new contracts of US$32.9 million in April,” says Low. Due for delivery by 1QCY18, Low says gross margins for these new contracts are estimated to be in the “mid teens”.
Looking ahead, Low forecasts that Triyards’ net gearing will remain at the 0.8x level for the next quarter until deliveries pick up, which would result in more cash inflows.
“We tweak our estimates, and rolling forward our valuations to FY17/18F, our fair value estimate slips to $0.33 (based on 0.35x book),” says Low.
As at 1.23pm, shares of Triyards are trading half a cent lower at 25.5 cents.
