E.A. TECHNIQUE (M) BHD
By PublicInvest Research Outperform Target price: RM0.73
E.A. Technique (EAT) has developed itself as a logistics provider which engages as an owner and operator.
Its core business, marine operations constitute 99.5% of revenue.
It is divided into two categories, marine transportation and offshore storage of oil and gas, as well as port marine services.
EAT’s outstanding orderbook in hand stands at RM930.5mil including contract extensions. This translates into 4.2 times of marine operations’ revenue as of FY17.
Furthermore, the group has submitted various tenders amounting to about RM1bil.
PublicInvest Research is nonetheless conservative in only assuming an RM150mil (15%) in FY19 replenishment, contrary to expectation of between 30% and 40% success rate.
The bulk (76%) of EAT’s fleet of 43 vessels are on long-term charters, with tenures stretching until 2027.
Only nine vessels have contracts expiring in the near-term while two vessels are under short-term time charter and spot voyages.
On average, EAT’s long-term contracts have outstanding periods of about six years.
This has resulted in high fleet utilisation of above 80%.
“We expect EAT to register strong growth of more than 100% and 26.6% in FY18 and FY19 on the back of its outstanding order book of RM930.5mil and tender book of RM1bil.
“For FY20, we are expecting marginal growth of only 6.6%, in line with our conservative order book replenishment assumption,” said PublicInvest Research.