TTA group's profits plunge 65% in Q1
Thoresen Thai Agencies (TTA), the country's leading dry-bulk shipping firm, yesterday reported a drop of 65.3 per cent year on year to Bt897.13 million in its net profit for this fiscal year's first quarter ending December 31, due mainly to a hefty drop in its dry bulk shipping business. TTA's stock, however, surged 2.52 per cent to close at Bt16.30.
Thirteen brokerages' consensus for the price target of TTA is Bt17.11 based on the average net profit projection for the company of Bt2.56 billion this fiscal year.
The company's total operating revenue was Bt7.27 billion, while total operating expenses were Bt5.65 billion during the first quarter.
Managing director Chandchutha Chandratat said in a report to the Stock Exchange of Thailand that the company's three business groups experienced lower revenue and profitability, as the effects of the global recession increased in their core activities.
"The dry-bulk sector witnessed a sharp downward trend during the first quarter," he said in the company's report.
Apart from the dry-bulk shipping group, the three other major businesses of TTA are shipping services, offshore services and drilling.
The dry-bulk shipping group recorded a consolidated net profit of Bt174.2 million, excluding exchange gains, down 90.9 per cent quarter on quarter.
The company's average daily freight rate during the first quarter dropped 57.33 per cent quarter on quarter to US$10.326 (Bt364) per day per ship.
Its operating expenses fell 7.26 per cent quarter on quarter to $6.44 per day per ship.
The main reasons for the collapse in both earnings and value are the 20-30-per-cent cut in the production of the steel industry, which accounts for almost half of the dry-bulk trade; China's negative experience in steel production since 2003; the credit crunch affecting spot trading of many commodities; and oversupply of newly built vessels.
The shipping-services group made a net profit contribution after deducting minority interests of Bt76.3 million, excluding exchange losses, to TTA's financial results.
In the offshore-services group, Mermaid Maritime recorded revenue of Bt1.58 billion from its core business, down 5.6 per cent quarter on quarter. Mermaid made a net profit contribution to TTA's 2009 first quarter of Bt180 million, excluding exchange gains, a decrease of 26.1 per cent quarter on quarter.
The drilling segment generated 32 per cent and 43.2 per cent of Mermaid's revenues and operating profits, excluding exchange losses, respectively.
Tisco Securities retains its "sell" recommendation on TTA shares.
Kim Eng Securities reiterated in its report that TTA's results in the first quarter of 2009 declined as expected.
The company posted Bt323 million in normalised profits, excluding extra income such as foreign-exchange gains and gains from the cancellation of convertible debentures, with a sharp drop of 86 per cent in the first quarter.
The brokerage said demand for shipping would soften further, while the new supply of vessels is expected to be higher than scrapped vessels in the second half of this year.
UOB Kay Hian Securities suggests a "trading buy", because the company reported a higher-than-expected net profit in the first quarter.
The Baltic Dry Index, a measure of shipping cost for commodities, could hit the level of 2,000 points.
"We expect the freight rate trend to increase, resulting in a positive effect on TTA, whose total revenues rely 90 per cent on the spot freight rate," the brokerage's report said.
UOB expects TTA's 2009 net profit will be Bt3.2 billion, compared to actual net profit of Bt8.78 billion in 2008.
The company also reported that its wholly owned subsidiary - Thor Star Shipping - had sold a cargo vessel to the Rivervalley Group for $1.25 million.
Thirteen brokerages' consensus for the price target of TTA is Bt17.11 based on the average net profit projection for the company of Bt2.56 billion this fiscal year.
The company's total operating revenue was Bt7.27 billion, while total operating expenses were Bt5.65 billion during the first quarter.
Managing director Chandchutha Chandratat said in a report to the Stock Exchange of Thailand that the company's three business groups experienced lower revenue and profitability, as the effects of the global recession increased in their core activities.
"The dry-bulk sector witnessed a sharp downward trend during the first quarter," he said in the company's report.
Apart from the dry-bulk shipping group, the three other major businesses of TTA are shipping services, offshore services and drilling.
The dry-bulk shipping group recorded a consolidated net profit of Bt174.2 million, excluding exchange gains, down 90.9 per cent quarter on quarter.
The company's average daily freight rate during the first quarter dropped 57.33 per cent quarter on quarter to US$10.326 (Bt364) per day per ship.
Its operating expenses fell 7.26 per cent quarter on quarter to $6.44 per day per ship.
The main reasons for the collapse in both earnings and value are the 20-30-per-cent cut in the production of the steel industry, which accounts for almost half of the dry-bulk trade; China's negative experience in steel production since 2003; the credit crunch affecting spot trading of many commodities; and oversupply of newly built vessels.
The shipping-services group made a net profit contribution after deducting minority interests of Bt76.3 million, excluding exchange losses, to TTA's financial results.
In the offshore-services group, Mermaid Maritime recorded revenue of Bt1.58 billion from its core business, down 5.6 per cent quarter on quarter. Mermaid made a net profit contribution to TTA's 2009 first quarter of Bt180 million, excluding exchange gains, a decrease of 26.1 per cent quarter on quarter.
The drilling segment generated 32 per cent and 43.2 per cent of Mermaid's revenues and operating profits, excluding exchange losses, respectively.
Tisco Securities retains its "sell" recommendation on TTA shares.
Kim Eng Securities reiterated in its report that TTA's results in the first quarter of 2009 declined as expected.
The company posted Bt323 million in normalised profits, excluding extra income such as foreign-exchange gains and gains from the cancellation of convertible debentures, with a sharp drop of 86 per cent in the first quarter.
The brokerage said demand for shipping would soften further, while the new supply of vessels is expected to be higher than scrapped vessels in the second half of this year.
UOB Kay Hian Securities suggests a "trading buy", because the company reported a higher-than-expected net profit in the first quarter.
The Baltic Dry Index, a measure of shipping cost for commodities, could hit the level of 2,000 points.
"We expect the freight rate trend to increase, resulting in a positive effect on TTA, whose total revenues rely 90 per cent on the spot freight rate," the brokerage's report said.
UOB expects TTA's 2009 net profit will be Bt3.2 billion, compared to actual net profit of Bt8.78 billion in 2008.
The company also reported that its wholly owned subsidiary - Thor Star Shipping - had sold a cargo vessel to the Rivervalley Group for $1.25 million.