Jaya -- Shipwrecked

Hihi, Just like to provide some insight about this Company. From my understanding, the Company has been building a lot of AHTS and other offshore vessels in anticipation of a booming offshore sector. Out of the 50-60 vessels that they are building now, some of them are actually speculative built... (Exact number, I cannot confirm). Suggest you get some clarification from the management on just how many vessels are speculative built? If they cannot find a buyer to those ships now, god knows how much they are going to lose on each ship. Cheers

MacGyver, Are you in this industry? How would you know that the Company is building ships on a speculative basis?

Before talking about speculative built, the 1st question to ask is what is the business model of Jaya? With a clear understanding of Jaya business model, then the next question is can Jaya finance the building program be it speculative or not? Can the inhouse program be slow down/delay or cancel? If no one is buying new vessel from Jaya, where those vessels go? A clear understanding of those questions will provide better picture.. It will also provide you with the answer on \"god knows how much they are going to lose on each ship.\" Jaya Shipwreck was written by me sometime back

Jaya\'s business model is nothing outstanding. Simply shipbuilding and shipchartering. They are heavily involved in offshore vessels (\"OSV\"), mainly AHT and AHTS. Demand for the smaller AHTS, the 6,000 bhp has dropped significantly as the E&P players moved into deep seas. For deep seas, you need minimum 10,000 bhp AHTS. My understanding, out of the 60 vessels being built now, only 10 plus vessels have confirmed orders from clients. The rest are speculative built by the Company themselves. While, the Company can slow down the newbuild program so as to reduce capex, one has to wonder whether they can still achieve the attractive profit margins which they command previously. Yes, the Company can put the completed vessels into their own fleet and chartered them out. But then again, as I mentioned, the charter rates of the smaller AHTS are dropping like stones. It used to be USD 1.90 per bhp, now i believe it is only USD 1.20 per bhp... Unlike conventional tugboats and barges, these specialised OSVs have specific demands. They cannot be used for simple transportation of coal, granite etc.... Hence, demand is very niche. Rather than Jaya, I would rather encourge investors to have a look at ASL Marine. The Company has good management, which has planned for the downcycle years in advance. ASL Marine shiprepair capabilities will bring in much needed recurring cashflows. The management has built a mega graving dock to repair the big vessels and they also have a smaller floating dock to cater to the smaller vessels. A finger pier has been built to berth the vessels in waiting... In addition, they commenced a S$300 million multi currency lending programme before the crisis happened. This strongly enhance their balance sheet despite the fact that they already have one of the strongest balance sheets among the marine companies..... This is going to be a long winter for the shipping industry... I anticipated 3 long years of consolidation followed by a boom again in 2013. Till then, it is anybody\'s guess which shipyards will emerge stronger. :laugh: :laugh:

Now I understand why. Base on your predictive power, you have every right to worry. But your predictive power is not what I want to k now.

Very strong rebound from 19.5 cents to 35.5 cents!