Jaya rides strong demand for OSVs

Company News - May 16, 2008

SGX-listed Jaya Holdings Ltd reported growth of 26 per cent year-on-year in net attributable profit to S$113.3 million for the nine months ended March 31st 2008.

For the three months to March 31st, Jaya saw turnover rise
32 per cent year or year to S$77.1 million with profit at S$39.1 million, up 9 per cent.

The Group’s offshore shipping division logged in a strong performance thanks to its higher-value fleet and gains from ship sales. Profit from the division leapt 65 per cent to S$76.3 million in the same period in FY08, and 31 per cent year on year to S$27.8 million in the third quarter of FY08.

Jaya’s Chief Executive Officer, Mr Chan Mun Lye, said: “This improved performance is the result of our strategic newbuild programme, which positioned us well to ride the strong demand from the offshore shipping sector. "

"Our move to build more and larger offshore support vessels has not only made it possible for Jaya to reap higher daily charter rates when they are added to our operating fleet, but also presented us with higher selling prices and profits when we
sold some of these vessels to external parties.”

The rising market prices of AHTSs and other types of offshore support vessels enabled Jaya to sell nine vessels from its existing fleet for a profit of S$48.7 million.

Several of these sales arose from the exercise of purchase options by their existing charterers.

Jaya's shipbuilding revenue of S$59.1 million was 41 per cent higher.

Said Mr Chan: “Our confidence in the sector remains firm as we continue to receive a high level of enquiries for our existing vessels and those under construction as well as invitations to quote for new buildings. Our vessels nearing completion are a particular draw for customers who are in urgent need of such vessels and cannot wait out the current long building cycle time for a new order."

The Group currently has 65 vessels under construction, with completion dates spread over the next three years. We estimate that these vessels, when completed, will have a total value of about S$2.2 billion based on current market selling prices.

These vessels are made up mainly of mid-sized AHTS, PSVs, dive support vessels and accommodation/crane barges.

"We intend to move strategically into the construction of more sophisticated subsea support vessels going forward. For our smaller range of 5,000+ bhp support vessels, we are equipping them with more specialised capabilities to meet market demand,” said the company, noting that, in line with its positive outlook for the sector, the Group intends to expand its Batam shipyard progressively over the next two years.

This expansion will double the number of building berths there to 10. Over the next two to three years, the Group also plans to progressively grow the capacity of its recently-acquired Qidong shipyard in Nantong, China.