ASL Marine: Secures orders worth S$131m (OCBC)

ASL Marine (ASL) announced that a wholly-owned subsidiary has secured new shipbuilding contracts worth a total of about S$131m for the construction of 11 vessels (two emergency response and rescue vessels, and nine AHT/AHTS vessels). These vessels are expected to be progressively completed between 4Q12 and 3Q13. The emergency response and rescue vessels are repeat orders from a customer and will be built at the Singapore shipyard, while the AHT/AHTS vessels will be built in the Guangdong shipyard. New shipbuilding orders have remained slow and it is encouraging to see that these new orders will provide some shipbuilding work for the group till 2013 (as at 31 Mar 2011, ASL had an outstanding shipbuilding order book from external customers of about S$218m for 41 vessels with deliveries till 2012). We like ASL's relatively flexible business model in which it can build vessels for its own chartering activities and increase its focus on ship-repair when the shipbuilding segment is weak. However, the external environment remains challenging for now. Hence, we maintain our HOLD rating and fair value estimate of S$0.67 on ASL.