I think it is very clear to all of us that the oil and gas sectors are undergoing a bear market right now. Companies with big order books and long term chartering contracts are likely to ride out this difficult moment. One of the companies I have been analysing is Vallianz Holdings Limited.
Corporate Profile
VALLIANZ HOLDINGS LIMITED ("Vallianz" and together with its subsidiaries, "the Group") is a provider of offshore support vessels and integrated offshore marine solutions to the oil and gas industry. Headquartered in Singapore, Vallianz serves oil majors and national oil companies worldwide, and focuses on supporting customers' offshore exploration and production operations in shallow waters. With a young and modern fleet of 37 offshore support vessels, the Group has been actively expanding its presence and building its network in the major and emerging offshore markets in Asia Pacific, the Middle East, Latin America and West Africa.
Despite presently tougher market environment, Vallianz Holdings Limited achieved
- Profitable Performance
- Stable Fleet Utilisation Rate
- Stronger order backlog
On 20 July 2015, Vallianz Holdings Limited have negotiated with an average of 10% cut in chartering rates with a National Oil Company. But extended duration of the chartering contracts till 2020 including options.
In December 2014, Vallianz Holdings Limited was awarded a US$97
million time charter to supply a customized Offshore Floating Storage and Supply Vessel to the NOC for
up to 5 years. On 13 July 2015, the Group secured a time charter worth up to US$300 million to supply
two self-elevating platforms to support the NOC’s offshore oil production activities for up to 7 years.
If you have gone through Vallianz Holdings Limited presentation slides on 12 August 2015, both the charter period for both contracts will start in Q3 2015.
As at July 2015, according to the presentation slides, the total outstanding order book is US$968 million.
Vallianz Holdings Limited have 2 bonds expiring in 2016. They are likely to seek funding through the debt and capital markets to redeem the bonds. As long as there is no contract cancellation, in my opinion, they are unlikely to have funding issues.
Chart: Source Chart Nexus dated 19/10/2015. For Illustration purposes only.
Key Ratios and Data:
NAV US$0.0688
Basic EPS US$0.26
Diluted EPS US$0.25
Order Book as at 31 July 2015: US$968 mil
Generated US$11.1 mil free cash flow in Q2 2015 after completing major capex to drive initial growth
My View:
Earnings growth likely to pickup in Q3 or Q4 2015.
Key Risk: Contract Cancellation, Vessel Delivery Delay
However, do note that the above recent contracts are negotiated and or renegotiated are done when the oil price is lower than the peak.
If you have further queries, you can contact me at 90400848 or email me at tplim1975@gmail.com.
Please let me know if there is any error in my posting as well.
Presentation slides and information are extracted from company announcements from sgx website.
http://infopub.sgx.com/FileOpen/VHL_IR.Presentation.2Q2015.ashx?App=Announcement&FileID=364386
Please do read the disclaimers.
