Here's what could be the game changer for ASL's shipbuilding business

Is it time to get more agressive?

According to CIMB, ASL is getting more aggressive by embarking on four build-to-stock AHTS in its Batam and Chinese yards, in view of the bottomed-out

vessel prices. This can be a game changer for its shipbuilding business.

Here's more:

In view of the bottomed-out vessel prices in the AHTS market, ASL has entered the build-to-stock model to expand its shipbuilding margins. It will start with four generic-designed AHTS vessels (6,000BHP and 8,000BHP) and one maintenance work vessel.

These vessels will cost S$85m in total and will be financed through ASL’s S$170m bonds. The construction will begin in 1QCY14 and is expected to be completed by 1QCY15. A successful sale of these vessels can fetch net margins of 30%.

Its shipbuilding gross margins on the order book model yields an average gross margin of 12.5%. However, its net gearing shot up to 0.95x from
0.53x in FY12 due to the higher debt secured in view of this programme.

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