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Jaya Holdings reports strong Q1-2013 results as earnngs recovery continues.....but there could be more good news for my Stock Pick
Jaya Holdings, one of my Stock Picks, has reported a good set of Q1-2013 results.
In a recent investment seminar organised by ShareInvestor, I highlighted Jaya as one of a few companies which I expected would report improving earnings despite the gloomy outlook for the Global economy.
Key highlights of the results:
a) revenue for Q1-13 rose 36% to US$36.7mn
b) gross profit was up 40% to US$12mn
c) Pretax profit rose 104% to US$10.3mn
d) net attributable profit rose 113% to US$10.13mn
e) the results were boosted by a reversal of an impairment charge of US$1.45mn
f) gross cash was US$183mn down from US$200.4mn in Q1-2012
g) Long term debt down to US$181mn down from US$196mn
h) EPS was US$ 1.31 cents while NAV was US$65.8 cents
Commentary
The recovery in the OSV charter market continues with only one vessel sold this quarter similar to Q1-2012. But at the charter side on the same fleet of 28 vessels, charter utilisation was more than 84% compared to 65% while charter rates also improved.
This recovery materialised in the second half of 2012 and should continue into 2013 with a growing preference among charterers for newer vessels which favours Jaya.
The company has also announced that its raising a new US$150mn loan facility. This facility will allow Jaya to retire its existing debt - the existing long term debt was preventing Jaya from paying dividends to shareholders through its loan convenant.
This is good news as investors can expect Jaya to start paying dividends as the new loan facilties do not have this restriction. However, while there is no penalty for early redemption of the loan - the cost of funds for the new loan are higher than the old facility.
I think we can continue to expect good news from Jaya in terms of a steady business recovery from both utilisation and charter rates boosted occassionally by vessel sales and, finally, dividends.
I have been recommending Jaya for some time because it's been significantly undervalued but a combination of financing problems and problems with its previous controlling shareholder have undermined its stock performance.
The shares are now set to resume a steady recovery to match that of its peer group. Retain in my Stock Picks - if you don't own the stock, its time to accumulate below the $0.60 level. As to my price target - please check my Stock Picks section.
Recent story: @ JAYA's AGM: Business transforming in the right direction