Brokers bullish on Thoresen Thai

Of 20 brokers in the Securities Analysts Association's consensus, 14 brokers recommend "piling up" TTA's stock, four brokers recommend "trading buy", while one each advises" hold" and "sell". The target price in the consensus ranges between Bt48.50 and Bt79 per share.

TTA is Thailand's largest dry bulk shipper, owning 45 general cargo vessels and bulk carriers as at the end of last year. It has expanded into offshore oil and gas-related services through its subsidiary, Mermaid Maritime, which owns four offshore supply and support vessels and two tender drilling rigs.

The company's net profit for its 2007 financial year ending September 30, 2007 was Bt4.97 billion, compared with Bt3.5 billion in the previous year. In the first quarter of its current financial year, net profit amounted to Bt2.58 billion.

On the risk side for TTA are the baht's appreciation and new vessels in the shipping industry coming into the market in late 2009. 

Asia Plus Securities recommends "buy" for TTA's stock, with a fair value of Bt66.60.

The broker forecast that TTA's second-quarter net profit would surge at an annual rate of 59 per cent to Bt2.03 billion.

"TTA's second-quarter normalised profit is expected at Bt1.88 billion, up 87 per cent year on year, and when including a foreign-exchange gain of Bt150 million - down from Bt270 million in the same period last year - TTA's net profit would be Bt2.03 billion," the broker said.

Asia Plus estimated that TTA's average time charter (TC) rate for its second quarter would jump 73 per cent year on year, a faster pace than the increase in the Baltic Dry Index, to $25,000 (Bt805,890) per vessel per day. Based on this assumption, the broker predicted that TTA's income from the TC rate would increase 64 per cent year on year.

The Baltic Dry Index has rebounded from its bottom at 5,900 points in TTA's second quarter to 10,221 at present, and this will boost the company's net profit in its third quarter, as 60 per cent of its vessels' charter price is based on the spot rate.

The broker is optimistic that new vessel deliveries in the industry, expected to come into the market from the second half this year through to 2010, will be delayed as the US sub-prime crisis has caused difficulty in securing loans for new vessels and this might lead to building cancellations.

"These factors might maintain the TC rate at a relatively high level," the broker said.

Phillip Securities (Thailand) recommends "buy" on TTA's stock, with fair value of Bt59.25.

TTA's second-quarter profit will be reported at Bt7.2 billion, up 48.73 per cent year on year but down 6.92 per cent on the quarter, the broker forecast. The broker might revise its 2008 financial year net profit forecast to Bt5.62 billion after the firm announces its second-quarter earnings.

Kim Eng Securities (Thailand) has maintained its speculative "buy" recommendation, with a fair value of Bt78 per share.

The broker expects TTA to announce a second-quarter net profit of Bt2 billion, up 56 per cent year on year but down 22 per cent quarter on quarter.

Kim Eng has adjusted its 2008 financial year assumptions, with an average TC rate of $24,000 per day and 60-per-cent growth. TTA's costs for the same period were estimated to rise by 12 per cent year on year to $4,952 per day.

 It estimates TTA's 2008 normalised profit growth at 65 per cent to Bt7.03 billion. Gross margin is expected to widen to 33 per cent from 30 per cent in the previous year.