Mermaid - Mermaid Maritime off 4.6%; DBS Vickers cuts FY11 view

Stock Name: Mermaid
Company Name: MERMAID MARITIME PUBLIC CO LTD
Research House: DBS Vickers

Mermaid Maritime (DU4.SG) down 4.6% at $0.415 vs $0.40 intraday low, volume moderate at 1.2 million shares; fall comes after as oil & gas drilling group reports THB456.1 million ($19.9 million) FY loss.

DBS Vickers, which has Hold rating, lowers target to $0.49 from $0.52, says losses larger than expected, despite in-line revenue, due to Subsea division which suffered on back of lower utilisation, day rates, inherently high operating leverage.

Adds, LOIs with Keppel FELS for 2 newbuild jackups likely to be converted to firm orders soon, “however, even if Mermaid were to secure back-to-back charters today, contributions will only kick in from FY13 onwards, providing no support for near to medium term earnings.”



Expects FY11 net loss of THB96 million vs net profit of THB92 million previously. “Despite the weak earnings outlook for FY11, we believe Mermaid’s quality subsea assets should limit downside to current valuations.”