Analysis of marine companies

I did a very quick broad analysis of the offshore companies covered in the talk. After the analysis, I have narrowed down to just two companies: CSE Global and Yangzijiang. I will discuss why the other companies didn’t make the cut.

SBI Offshore

  • Good financial numbers
  • But, just IPO recently so have to wait and see how they do
  • In a competitive industry. There are so many companies like SBI offering offshore equipment supplies.

Viking

  • Revenue decreasing over the years
  • Inconsistent cashflow from operations over the years
  • Net profit margin and Return on Equity (ROE) a measly 2%
  • Return of Assets (ROA) is worst off at 1.6%

Otto Marine

  • Low ROA
  • ROE has been decreasing over the years
  • Increasingly negative cashflow from operations for the past 2 years
  • Net earnings is increasing but operating cashflow decreasing due to the reason that they have $150 million in cash locked in with customers who have yet to pay up. In uncertain periods like now, this is a no-no.

Marco Polo Marine

  • Current ratio less than 1
  • ROE decreasing over the years
  • Net profit margin decreasing over the years
  • Revenue not consistent over the years
  • Cashflow from operations in FY2009 was $38.4 million but in FY2008 was only $8.6 million. Cashflow from operations jumped so much over one year. Skeptical about this.

So, the better companies are CSE Global and Yangzijiang. I will do a thorough analysis on them soon. I also came across CH Offshore after doing a stock screener in the offshore industry. I’ve heard about CH Offshore previously but I’m not sure why I didn’t look into it before.

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