In today’s daily we have covered stock research on MMA OFFSHORE (BUY).
The S&P 500 was down by 7.91 points or 0.37% on Wednesday and closed at 2106.85 points. U.S. stocks ended lower on Wednesday as the Federal Reserve cited weakness in the U.S. economy and data showed U.S. growth slowed more sharply than expected in the first quarter. But the Fed's acknowledgement of weakness in some sectors of the economy makes it more likely it will not be ready to raise until at least September, which kept stocks from falling further. Seven of the 10 S&P 500 sectors ended lower, with just energy, financials and materials in positive territory.
Twitter fell 8.9 percent to $38.49, a day after the company cut its full-year forecast due to weak demand for its new direct response advertising. Other decliners included Wynn Resorts which fell 16.6 percent to $108.77 after the casino operator reported weaker-than-expected first-quarter profit. Salesforce.com Inc jumped 11.6 percent to $74.65 after a Bloomberg report that it is working with financial advisers to help field takeover offers after being approached by a potential acquirer.
Twitter Daily Chart (Source - Thomson Reuters)
S&P ASX 200 was down by 109.94 points or 1.85% on Wednesday and closed at 5838.6 points.Commonwealth Bank of Australia, Westpac Banking Corp, National Australia Bank and ANZBanking Group all losing around 2 per cent. CBA fell 2.2 per cent to $90.57, Westpac lost 2.6 per cent to close at $37.40, while NAB fell 2.4 per cent to $37.46 and ANZ lost 1.9 per cent to close at $34.75. The jump in the Australian dollar also hit companies that report in US dollars, including Sims Metal Management which lost 6.8 per cent to $10.77, Ansell fell 4.9 per cent to $26.10, James Hardie lost 4.7 per cent to close at $14.40 and CSL was hit 4.4 per cent to finish at $91.
Other movers of the day included IAG, which closed down 4.1 per cent lower to $5.65 after lowering its full-year insurance margin guidance in the wake of the Sydney storms last week. The big winners of the day were energy stocks including MMA Offshore, which added 5.4 per cent,Northern Star which added 3.6 per cent per cent, and AWE which gained 3 per cent. A rally in the iron ore price, stronger than expected CPI data, as well as hints by RBA governor Glenn Stevens at a speech last week that the bank, while open to cuts, had reasons not to drop the rate too far, are among developments that have brought the market off its earlier stance that a rate cut was imminent.
CSL Daily Chart (Source - Thomson Reuters)
Top Stocks ASX 200 :-
Get up to 2 Years of free subscription by inviting your friends to KALKINE!
For every friend of yours who joins KALKINE, we'll give you 3 months of free subscription (up to a limit of 24 months free subscription). If you recommend 3 friends and they join within a month of you referring them, you get 1 year free subscription to KALKINE reports added to your account (up to a limit of 24 months free subscription). Simply reply to this email with their name, e-mail and phone number.
MMA Offshore Limited
Stock Of The Day - MMA OFFSHORE (BUY)
Mermaid Marine Australia (MRM) reported 71.2% surge in profit before tax of $55.3 million and net profit after tax of $37.7 million indicating a rise of 55.8% for the half year ended 31 December 2014 over prior corresponding period (pcp). This has been in consensus with the expectations illustrated earlier. The Company also declared the interim dividend of 4.0 cents per share.
Financial Results (Source – Company Reports)
MRM states that international market has been challenging with pressure piling on rates and utilization across vessel segments. Overall, there has been an impact of plummeting oil prices but the Australian construction market with major offshore support work correlating to construction of LNG projects that have been approved and moved into the construction stage, could withstand turbulence. For instance, Mermaid Leeuwin is proffering drilling support in view of the contract with Woodside in the Browse Basin; and Ichthys, Prelude and Wheatstone LNG projects will continue through to FY17. As other players, MRM is also taking initiatives with regards to cost reduction and productivity improvement in order to manage the turbulent market conditions.
MRM’s result is an outcome of key Australian vessel projects. The earnings before interest and tax from the vessel division were $55.0 million up 166% on pcp. 82% of average utilisation was achieved by the main fleet under Australian vessel operations. Work with Subsea 7 Heavy Lift and Tie in project for mobilizing and managing a total of 20 vessels to support the delivery and installation of the Gorgon subsea infrastructure has been going well. Contribution is also seen from MV Silja Europa accommodation vessel contract that is further to provide benefits in FY16. The one year extension with Santos with regards to Modec Venture II FPSO is another achievement.
The international fleet utilisation averaged 72%. Little unsettlement with regards to activity in South East Asia and Africa owing to oil price associated issues and cancellation/ re-tendering of some projects and campaigns has been noted; while better demand emanated from Middle East although at low rates. Nevertheless, the key contribution comes from the Jaya business although slightly below expectations given the difficult conditions encountered in the international vessel market. Owing to some Australian tax liabilities associated with Jaya, MRM reported a higher tax rate of 31.9% than what was earlier expected. It is estimated that this may normalize in future.
Vessel Earnings (Source – Company Reports)
Five new vessels are under construction with regards to the new build programme. Further, the Company reported that two ROV Support vessels (MMA Prestige and MMA Pinnacle) are expected to be delivered in FY16 and were being bid into longer term inspection, maintenance and repair (IMR) contracts. This appears to be a new market segment for the Company. Additionally, two platform supply vessels are expected to enter the fleet in FY17 and were contracted to INPEX for about 10 years.
Dampier Supply Base Financials (Source – Company Reports)
Dampier Supply Base reported earnings before interest and tax of $9.6 million indicating a 49% dip from the second half of last year. Poor Gorgon construction activity affected the demand for the Dampier Supply Base. Blow also came from the reduction in rental income affecting the margins. The efforts to increase client base and tender supply base contracts is still on. Similarly, we note the below par expectation driven result for the Dampier Slipway delivering an EBIT of $0.4 million which is disappointingly below from $1.1 million of pcp. Boost is only expected with increase in bookings in the second half. Nonetheless, MRM highlights Dampier Supply Base and Slipway being its strategic assets which are expected to showcase respective potential going forward.
Broome Supply Base JV (Source – Company Reports)
The Broome Supply Base, which is under the JV with Toll Holdings Ltd, reported NPAT of $1.7 million consistent with the pcp result of $1.8 million. The Base is reported to have braced drilling programs in the Browse Basin region for Shell, Woodside, Conoco Philips and Santos.
Key Liquidity Ratios (Source – Company Reports)
The second half may be little weaker owing to contracted Australian construction activity as the Gorgon project moves to completion. As per the stock price, MRM has been on the edge in the transportation sector in recent times. However, the first half results with strong cash flow and a robust balance sheet may help MRM overcome the turmoil. Primarily, relatively low gearing of 37% and $143 million cash at bank may provide good leverage. The star-performer, operating cash flow of $118.4 million benefitted from the upfront mobilisation costs payment. There is also an increase of 2,553,564 shares, i.e., about 0.7% in total shares on issue from 368,666,221 to 371,219,785, as per the recent update.
MRM Daily Chart (Source - Thomson Reuters)
Based on the foregoing, we put a BUY recommendation for this stock at the current price of $0.68.
Level 13 167 Macquarie Street
Sydney NSW 2000 Australia
E-Mail - [email protected]
Phone - 02 8667 3147
Note - You can also view this daily in the special reports section.
Disclaimer
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people.
Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376).
The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation.
Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product.
The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide.