*Dear all, below is my introductory writeup on Kreuz. As i have problems attaching some of the charts on my blog, feel free to email me at crclk@yahoo.com.sg
Description of Kreuz
Before July 2008, Kreuz was a division of the Swiber Group. Subsequently, it was listed on SGX on 29 Jul 2010 and transferred its listing to the Main Board of the SGX-ST on 8 Oct 12. Kreuz is a sub sea provider whose services include subsea construction and installation services which support new offshore installation and construction projects, as well as, inspection, repair and maintenance (“IRM”) of existing offshore production and pipeline facilities. Do refer to Kreuz’s website http://www.kreuzsubsea.com/services.html for more details.
Some interesting points
1. FY13F likely to beat FY12 record revenue and earnings since listing
Order book as at end Feb 2013 is around US$205m (See Figure 1) of which the bulk is likely to be recognised in FY13F. (FY12 revenue was around US$193m.) Thus, coupled with the variation orders or unannounced contracts, Kreuz is likely to turn in a better FY13F than FY12, notwithstanding that FY12 was already a record year in terms of revenue and net profit since listing.
Figure 1: Kreuz’s order book (in US$m) since Feb 2011
Source: Company
2. Variation orders or unannounced contracts are quite material
According to DBS Research, variation orders or unannounced contracts which are not shown in their order books can be quite material. Thus, by looking at Kreuz’s order book alone may underestimate the financial results of the firm.
3. Industry prospects remain bright
With reference to Figure 2 below, it is apparent that the capital expenditure is likely to increase in the various regions and for IRM from now to 2016. According to Infield Systems, an independent energy research and analysis firm, they estimate that subsea expenditure for 2011 – 2015 will triple to US$7b, up from US$2.25b over 2006-2010. This is corroborated by the positive comments from the various large subsea players such as Technip, Saipem, Aker Solutions etc.
In addition, in Asia, Malaysia, China, India and Indonesia are likely to lead subsea demand over the next five years. This should bode well for Kreuz with its presence in Malaysia, India and Indonesia.
Figure 2: Industry prospects remain sanguine
Source: Douglas Westwood
4. Strong tenderbook of about US$500m
Notwithstanding Kreuz’s strong order book of US$205m, Kreuz’s order tenderbook is currently around US$500m of which (according to DBS Research), there may be new order wins in the near term.
5. FY15F is likely to be another growth year when its new build vessel arrives
Kreuz is building a US$113.65m deepwater subsea construction vessel via a Chinese shipbuilder. This vessel will be equipped with dynamic positioning and would enable Kreuz to compete in deepwater projects with leading subsea contractors such as Subsea 7 and Technip.
According to DBS Vickers, based on 60-70% utilisation on the new build vessel, it can rake in minimum incremental revenue of US$50m and net profit of up to US$15m per year. (Kreuz FY12 revenue and earnings were US$193m and US$40m respectively.)
6. Interesting sell queues
Although the 30 day average volume amounts to 2.8m shares a day, there seems to be heavy sell queues (most of the time) at 0.485-0.505 of around a million each. This begs the question that if the sellers do have that many shares, they are likely to be professionals and are unlikely to place so many shares on each level. This would deter the potential buyers away. Furthermore, although the buy queue for Kreuz looks thin, it seems rather steady and price is roughly around the same level without dropping much intraday.Personally (although I cannot quantify point 6 and it is most likely not 100% accurate), this pattern seems to show smart money accumulating the shares. I have seen it in Guocoleisure, Ezion, Nam Cheong, Sino Grandness, China Animal, Eratat before. They seem to be a prelude of some upwards movement (though it may take some time to materialise.)
Some noteworthy points
1. Long trade receivables
One of the drawbacks of Kreuz that most investors are wary of is its long trade receivables days. According to UOB Kay Hian Research, receivables spanning more than 6 months currently constituted about 50% of its receivables which is quite a significant amount. However, UOB Kay Hian cited that this was already an improvement from 6 months ago, where such receivables constituted about 60% of its receivables. According to company, they are of the view that the receivables remained collectible.
2. Customer concentration risk I.e. Reliance on Swiber
Another concern that some investors cited is the customer concentration risk. With reference to Figure 3 below, Kreuz has come a long way to diversify its customer base. In FY12, despite Swiber contributing more in revenue dollar terms, the revenue from 3rd parties continued to rise from 60% in FY11 to 61.7% in FY12.
Figure 3: Revenue split from Swiber and 3rd parties
Source: Company
Nice chart
With reference to Chart 1 below, Kreuz’s chart looks reassuring as it seems to be on an uptrend and is attempting to break out above its resistance of $0.490. Indicators such as RSI, MACD etc seem to be strengthening but are not overbought at current levels. OBV is at an all time high. ADX seems to be stopping its decline and turning upwards amid positively placed +DI. If it breaks $0.490 with volume, a measured technical target price would be around $0.550 with the first significant resistance (after $0.490) to be around $0.515 (all time high price).
Chart 1: Attempting to break $0.490 resistance
Source: CIMB itrade complimentary chart (28 Mar 13)
Valuations low against peers
According to Bloomberg, if we compare Kreuz against its Singapore listed peers (though not exactly direct comparables), it is trading at the lowest FY13F PE (Kreuz: 4.7x FY13F PE vs the average FY13F PE
of 9.7x) with the highest ROE (Kreuz: 29.4% vs the average ROE of 12.6%). In addition, Kreuz has actually given an interim dividend of 1.1 SG cents in 3QFY12 but for prudence, analysts who covered Kreuz are not projecting any dividends for this year.
of 9.7x) with the highest ROE (Kreuz: 29.4% vs the average ROE of 12.6%). In addition, Kreuz has actually given an interim dividend of 1.1 SG cents in 3QFY12 but for prudence, analysts who covered Kreuz are not projecting any dividends for this year.
Table 1: Kreuz vis-à-vis its peers
| Short Name |
Last Px | Analyst TP | Change in TP | 1 Yr high | 1 Yr low | Adj Mkt Cap (S$m) |
FY12 PE | FY13F PE | ROE (%) | Fwd P/Bv | Fwd Div Yield |
| Kreuz Holdings |
0.48 | 0.55 | 15.6 | 0.49 | 0.25 | 267.4 | 5.3 | 4.7 | 29.4 | 1.1 | NA |
| Swiber Holdings |
0.67 | 0.82 | 21.8 | 0.73 | 0.51 | 409.0 | 6.7 | 5.7 | 11.2 | 0.6 | 1.7 |
| Ezion Holdings L |
2.12 | 2.42 | 14.0 | 2.17 | 0.71 | 2036.2 | 17.9 | 12.7 | 19.5 | 2.5 | 0.1 |
| Ezra Holdings Lt |
1.16 | 1.37 | 18.2 | 1.36 | 0.82 | 1130.5 | 14.7 | 15.5 | 6.3 | 0.8 | 0.8 |
| ASL Marine Hldgs |
0.72 | 0.87 | 22.1 | 0.75 | 0.55 | 301.7 | 8.2 | 6.9 | 10.3 | 0.8 | 2.9 |
| CH Offshore Ltd |
0.48 | NA | NA | 0.53 | 0.36 | 334.9 | 7.0 | 7.5 | 15.7 | 0.8 | 7.1 |
| Average ex Kreuz | 10.9 | 9.7 | 12.6 | 1.1 | 2.5 |
Source: Bloomberg (as at 28 Mar 13)
ConclusionThis is just an introduction on Kreuz. Readers who are interested to know more about Kreuz can email me at crclk@yahoo.com.sg for the analyst reports & my full writeup complete with charts.
P.S: This is an abridged version which I had sent to my clients on last Wed.
Disclaimer
The information contained herein is the writer’s personal opinion and is provided to you for information only and is not intended to or nor will it create/induce the creation of any binding legal relations. The information or opinions provided herein do not constitute an investment advice, an offer or solicitation to subscribe for, purchase or sell the investment product(s) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of this information. Investments are subject to investment risks including possible loss of the principal amount invested. The value of the product and the income from them may fall as well as rise. You may wish to seek advice from an independent financial adviser before making a commitment to purchase or invest in the investment product(s) mentioned herein. In the event that you choose not to do so, you should consider whether the investment product(s) mentioned herein are suitable for you. The writer will not, in any event, be liable to you for any direct/indirect or any other damages of any kind arising from or in connection with your reliance on any information in and/or materials appended herein. The information and/or materials are provided “as is” without warranty of any kind, either express or implied. In particular, no warranty regarding accuracy or fitness for a purpose is given in connection with such information and materials.
Wow, superb weblog structure! How lengthy have you ever been running a blog for?
you make blogging glance easy. The whole glance of your website is wonderful, as neatly as
the content material! You can see similar here dobry sklep
Im obliged for the blog post. Really Cool.
Exceptional post however , I was wondering if you could write a litte more on this subject?I’d be very grateful if you could elaborate alittle bit more. Bless you!
The only point I regret is not having found your blog earlier.
I’d like to thank you for the efforts you have put in penning this blog. I am hoping to check out the same high-grade content by you later on as well. In fact, your creative writing abilities has motivated me to get my very own blog now 😉
Great post. Want more.
I appreciate you sharing this blog post.Really looking forward to read more.
I appreciate you sharing this blog article.Really thank you! Awesome.
I think this is a real great blog.Much thanks again. Will read on…
Very informative post. Cool.
I really like and appreciate your article post.Thanks Again. Really Cool.
Im obliged for the blog.Much thanks again. Much obliged.
I think this is a real great blog post. Keep writing.
I do not even know how I ended up here, but I thought this postwas great. I don’t know who you are but definitely you are going to a famous blogger if you arenot already 😉 Cheers!
Tjxqpt – what does sildenafil do Bcqnfa reiusk
azithromycin sunburn bactrim kidney omnicef picture
You carry an unique capability. Your creating skills are truly remarkable. Thanks for writing material on-line and teaching your followers.
Hi there, this weekend is fastidious designed for me, for the reason that this moment i am reading this impressive informative piece of writing here at my home.
That is a great tip particularly to those new to theblogosphere. Simple but very accurate information… Appreciate your sharing this one.A must read post!
I am not certain the place you are getting your info,but great topic. I needs to spend a while finding out more or working out more.Thanks for excellent information I was searching for this information for mymission.
My brother recommended I would possibly like this blog.He used to be entirely right. This put up truly made my day.You can not imagine simply how much time I had spent for this information! Thanks!
Interested in more information. How can I reach you?
I really liked your blog post.Thanks Again. Really Great.
Thẳng Bóng Đá Hôm Nay, Liên Kết Coi đá Bóng Trực Tuyến 24h xem da bong truc tiep k+Đội tuyển nước ta chỉ cần thiết một kết trái hòa có bàn thắng nhằm lần thứ hai góp mặt trên World Cup futsal. Nhưng, nhằm thực hiện được điều đó
Heya i’m for the primary time here. I found this board and I to find It truly helpful & it helped me out a lot. I hope to give something again and aid others like you aided me.
Thanks a lot for the article post. Much obliged.
Regards! I value it.university essay help help me write a essay academic writing service
Thank you ever so for you article post. Will read on…
A big thank you for your blog.Really looking forward to read more. Keep writing.
Howdy! I just wish to give you a huge thumbs up for the great information you have right here on this post. I am returning to your blog for more soon.
And it’s so entertaining fooling around and producinga personality. Over-all it’s the very best activityever built.Free Fire Account Free 2021 Garena Accounts AndPasswordFree Fire Account Free
Enjoyed every bit of your blog.Really looking forward to read more. Awesome.
I want assembling utile information , this post has got me even more info! .
Aw, this was an extremely good post. Taking the time and actual effort to generate a very good article… but what can I say… I procrastinate a whole lot and never seem to get anything done.
What’s up friends, how is the whole thing, and what you desire to say on the topic of this piece of writing, in my view its really amazing in favor of me.
Hi there, this weekend is good designed for me, as this occasion i am reading this impressive informative article hereat my home.
It’s really a great and useful piece of information. I am glad that you shared this helpful information with us. Please keep us informed like this. Thank you for sharing.
I together with my guys were found to be going through the nice key points on your site and so all of a sudden came up with a horrible feeling I never thanked you for those strategies. The people had been for that reason happy to read all of them and have now without a doubt been taking pleasure in these things. I appreciate you for indeed being quite thoughtful and then for deciding upon these kinds of high-quality subject matter millions of individuals are really needing to understand about. Our own honest regret for not saying thanks to you earlier.
Hey There. I discovered your weblog using msn. This is a really smartly written article. I’ll make sure to bookmark it and return to read extra of your helpful information. Thank you for the post. I’ll certainly return.
Do you have a spam issue on this blog; I also am a blogger, and I was wanting to know your situation; many of us have created some nice practices and we are looking to trade methods with other folks, be sure to shoot me an e-mail if interested.
Simply wish to say your article is as astounding. The clarity on your post is simply great and that i can suppose you’re a professional on this subject. Well together with your permission let me to snatch your feed to stay updated with forthcoming post. Thank you a million and please continue the enjoyable work.
You made some first rate factors there. I looked on the web for the issue and located most individuals will associate with along with your website.
I have been checking out many of your posts and i can state clever stuff. I will definitely bookmark your blog.
Yesterday, while I was at work, my sister stole my apple ipad and tested to see if it can survive a 40 foot drop, just so she can be a youtube sensation. My iPad is now destroyed and she has 83 views. I know this is completely off topic but I had to share it with someone!
It’s really a nice and helpful piece of info. I am happy thatyou simply shared this useful information with us. Pleasekeep us informed like this. Thank you for sharing.
Your home is valueble for me. Thanks!…
I found your weblog site on google and examine a number of of your early posts. Proceed to maintain up the superb operate. I simply extra up your RSS feed to my MSN Information Reader. In search of forward to reading more from you in a while!…
Hello, i think that i saw you visited my website so i came to “return the favor”.I’m attempting to find things to enhance my website!I suppose its ok to use some of your ideas!!
F*ckin’ awesome issues here. I am very satisfied to peer your article. Thanks so much and i am taking a look ahead to contact you. Will you kindly drop me a mail?
cytotec 200 mcg – cytotec online pharmacy with paypal cytotec for iud insertion
to grab readers interested about everything’ve got to
Simply a smiling visitor here to share the love (:, btwgreat design.My blog … Hyper XXL Male Enhancement Reviews
Its like you read my mind! You appear to know a lot about this, like you wrote the book in it or something. I think that you could do with a few pics to drive the message home a little bit, but instead of that, this is great blog. An excellent read. I will definitely be back.
Hello there! Do you use Twitter? I’d like to follow you if that would be ok.I’m undoubtedly enjoying your blog and look forward to new posts.
I cannot thank you enough for the post. Will read on…
hi!,I like your writing so much! share we communicate more about your post on AOL? I need an expert on this area to solve my problem. May be that’s you! Looking forward to see you.
Say, you got a nice blog article.
I really enjoy the post.Much thanks again. Much obliged.
Hi there, its fastidious piece of writing on the topic ofmedia print, we all understand media is a enormous source of information.
Very informative blog.Really thank you! Want more.
Looking forward to reading more. Great article.Thanks Again. Really Great.
Oh my goodness! an amazing post dude. Thank you Nevertheless I am experiencing problem with ur rss. Don?t understand why Not able to sign up for it. Exists any person getting the same rss trouble? Anyone who understands kindly react. Thnkx