$PacificRadiance (RXS.SG)$ Phillip Securities has initiated ...

Phillip Securities has initiated coverage on Pacific Radiance with a BUY recommendation and target price of 0.06. Valuations pegged to the industry average of 8x PE. The offshore support vessel industry is enjoying a resurgence in charter rates from rising demand as global offshore capex recovers. Supply is constrained by an ageing fleet and a decline in shipyard capacity where vessel orders are only 3% of the existing fleet. Pacific Radiance is riding on higher charter rates as it rebuilds its fleet and expands shipyard capabilities. Stock is trading at a 40% discount to book.

They expect earnings to jump in FY25e, backed by more than USD40mn of charter contracts, the construction of crew transfer vehicles, and increased scale in ship management operations. The restructuring of associate Logindo will further enhance the company's valuation.

Following the debt forgiveness exercise, vessel disposal, and rights issue, the company's net debt has shrunk from USD365mn to USD24mn net cash. Funds have been used to expand shipbuilding, reduce interest expenses and re-activate laid-up vessels for charter.