Company Name: KREUZ HOLDINGS LIMITED
| Research House: DBS Vickers | Price Call: BUY | Target Price: 0.43 |
Kreuz’s valuations are unjustifiably cheap, DBS Vickers says. 2Q12 net profit of US$13.3 million ($16.6 million), up 29% on-quarter, was above expectations on accelerated revenue recognition, while 1H12 net profit of US$23.6 million was nearly 75% of its FY12 estimate, it says.
It expects margins to improve with the 2Q12 acquisition of a diving-support vessel as it eliminates the higher costs of hiring third-party vessels. Year-to-date order wins of US$155 million surpassed DBSV’s initial US$150 million FY12 assumption and it doesn’t rule out further upside; it expects FY13 order wins to be similar given the region’s robust offshore E&P activity.
It expects 2H12 earnings to decline on-half on seasonality, but still forecasts FY12 net profit growth of 16%; it raises its FY13 earnings estimate by 5% on potentially better margins.
It forecasts FY11-13 net profit CAGR of 18%. “Despite a healthy earnings outlook, the counter has underperformed the broad index in 2012 and is still trading below 4X FY13 P/E.”
It keeps a Buy call with $0.43 target. The stock is up 4.8% at $0.325 at 4:32 pm.
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