Saturday, April 7, 2007

Sharekhan report on SE Asia Marine

Broking house, Sharekhan is bullish on South East Asia Marine Engineering & Construction and has maintained buy rating on the stock with a target of Rs 300.

Key points

The robust financial performance of South East Asia Marine Engineering & Construction (SEAMEC) was driven largely by higher deployment days and an increase in charter rates. The strong growth momentum in earnings and tight working capital management resulted in a significant improvement in the return ratios during CY2006.

The outlook on charter rates continues to be bullish for the next two years. Moreover, the deployment of SEAMEC’s recently acquired fourth vessel from mid- CY2007 would drive growth. It would also enable the company to more than nullify the impact of the revenue loss and expenses resulting from the planned periodic dry-docking of two vessels in the second half of CY2007.

A sharp appreciation of the rupee and an unexpected delay in the deployment of its fourth vessel are two key risks to our earnings estimates. w At the current market price the stock trades attractively at 7.2x CY2007 and 5x CY2008 estimated earnings. We maintain our Buy recommendation on the stock with a price target of Rs 300.

Posted by Ayush Jain at Saturday, April 07, 2007

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