SINGAPORE (Nov 17): DBS is maintaining its “hold” call on Mermaid Maritime with a target price of 14 cents as the group’s near-term outlook is “a mixed bag”.

This came after the group announced that it made a loss of US$2.04 million ($2.77 million) in 3Q17 compared to earnings of US$7.49 million in 3Q16.

See: Mermaid Maritime sinks into the red; posts 3Q losses of $2.8 mil

In a Thursday report, analyst Suvro Sarkar says that the group’s earnings came in below the research house’s expectations and this was due to a sharp drop-off in workload, despite 3Q typically being a seasonally strong quarter (due to lack of strong monsoon winds/tides).

Revenue for the quarter also dropped 41.2% to US$30.6 million, due to a decrease in the group’s revenues from services.

Nevertheless, the group’s management expects a better 4Q17, as some jobs intended for 3Q17 were rolled over and all the major vessels should be well utilised.

In this quarter, the group’s orderbook increased to US$174 million from US$99 million in 2Q17. About 80% of the orderbook should be recognised in the next one year or so.

The group’s orderbook is boosted by a one-year extension on the Asiana’s contract in the Middle East secured in the quarter. It has a total contract value of US$96 million and Mermaid’s portion a ‘major part’ of that figure. The extension contract begins in 4Q17.  

See: Mermaid secures contract extension for subsea services in Middle East worth $129 mil

Meanwhile, it was previously clarified that as part of Seadrill’s restructuring agreement, AOD (66% owned by Seadrill; 33% by Mermaid) was granted a temporary waiver and forbearance from default that may have arisen under AOD’s bank credit facility agreement.

“Going forward, the focus will be on how AOD handles the bullet payment of US$180 million on its debt facility due in April 2018,” says Sarkar.

As at 9.52am, shares in Mermaid Maritime are trading at 14 cents or 0.4 time FY17 book.