Wednesday, September 16, 2009

Why I Like TAS Offshore


I like the fact that the company recently had its IPO. I like the fact that the price went down below IPO as that shows no collusion, just allowing the fringe players to sell if they want to. The IPO was at 90 sen, now its hovering at 77-78 sen. I like the buying build up in volume. Is there something wrong with the company? Doesn't look like it at all. In fact, the more I look at it the better it gets.

Its even on a more solid standing than its older listed peers like Sealink and Coastal.
TAS Offshore Berhad (TAS) is involved in shipbuilding and ship repairing of vessels to the oil and gas players. TAS’s shipyards located in Sibu, Sarawak have the capacity to manufacture up to 23 vessels per annum. TAS intends to establish a new shipbuilding yard covering an area of at least 60 acres to cater for future growth. Typically construction period for a vessel range between six to eighteen months, depending on the type and specification.

However, due to the booming offshore support vessels activities, the construction period could stretch longer due to limited
availability of engines. Based on TAS IPO prospectus, the group intend to move up the value chain from largely building vessels to owning and chartering offshore vessels. Apart from being a vessel owner, TAS has commenced its build, own and sale operations. Based on TAS IPO prospectus there are 6 vessels built under this concept. Theoretically, margins expansion arises in an upcycle as TAS’s raw material like steel and engines are locked in at today’s cost, while vessels are sold at tomorrow’s prices.

Datuk Lau Nai Hoh, the founder and the managing director of TAS Offshore, is also the largest shareholder of the group, with a stake of approximately 50.3% post-IPO. With about 20 years of experience in the marine industry, Datuk Lau has been instrumental in the development of
TAS Offshore and is primarily responsible for the company’s planning and development of its strategic business direction. Its Non-Executive Chairman, Datu Haji Mohamed Sepuan Bin Anu, was the Agriculture Adviser in the Ministry of Modernisation of Agriculture up to April 2007.

Over the past 3 years, the Group has been growing at an impressive CAGR of 32.8%, and a bottom line growth of 43%. Its revenue, which is mainly derived from shipbuilding, has grown significantly mainly due to the Group’s endeavours to develop markets overseas. The Group has been able to secure orders from local customers, particularly from East Malaysia.
Its currently running at just 7x FY09 earnings, a slight discount to Sealink and Coastal, which is really unjustified. Considering that TAS Offshore will be in a net cash position post-IPO whereas its peers are in net debt. It has a strong order book and is an established name. The recovery in oil and gas industry bodes well for the company.

Net Profit: 7.8m (06) / 14.7m (07) / 16.0m (08) / estd 20.om (09)


Issued Shares: 180m


I see no reason why it should not trade between RM1.05-RM1.10 as a fairer value range.


p/s photos: Meisa Kuroki

2 comments:

KAM said...

1). I and my investors frens applied for private placements before IPO at RM0.90. But we were only allotted 10% of our total application.

2). Forward net PE is even lower then 7.

3). Once the weak holders get out, then i think RM1.00 - RM1.20 is sap sap water.

KAM said...

forward net PE is even lower then 7