\n\tBy Chris Shaw<\/p>\n
\n\tYesterday it was Macquarie and JP Morgan initiating coverage on service vessel provider Miclyn Express Offshore (see: Buy Ratings For Miclyn, FNArena, 11\/5\/10) and today Deutsche Bank has joined the list, commencing coverage on the stock with a similarly positive Buy rating.<\/p>\n
\n\tDeutsche suggests Miclyn offers significant upside potential via the combination of exposure to the buoyant Western Australian oil and gas sector and the ability to capitalise on growth opportunities via a strong balance sheet.<\/p>\n
\n\tThe recent acquisition of Samson should help earnings receive a boost in FY11 in Deutsche's view, as should an expected recovery in utilisation rates and a full period of contributions from eight new vessels delivered in the first half of 2010. These vessels are generating higher charter rates than the fleet average.<\/p>\n
\n\tDeutsche expects Miclyn will comfortably post low teens earnings growth post FY11, with risk to this estimate to the upside in the broker's view. New contracts would be a catalyst to better than expected performance.<\/p>\n
\n\tThe other potential source of upside according to Deutsche is further fleet growth, as on its numbers cash flows in FY11 should allow for growth capex of around $60 million, which compares to a current forecast of $40 million. This is in addition to Miclyn's existing balance sheet capacity.<\/p>\n
\n\tThe solid earnings growth outlook, with Deutsche forecasting earnings per share (EPS) of 12c this year, 21c in FY11 and 23c in FY12, is also of a higher quality than that of its peers according to the broker.<\/p>\n
\n\tThis reflects a combination of longer-term contracts at typically higher charter rates. According to Deutsche this offers Miclyn some protection from oversupply issues in the sector and should deliver the expected improvement in utilisation rates.<\/p>\n
\n\tBased on its earnings forecasts Deutsche Bank has set its price target for Miclyn at $1.85, which is below Macquarie's $2.25 target and JP Morgan at $2.16. Deutsche notes the share price has declined by 16% since the stock listed earlier this year at $1.90, this weakness improving the value on offer and supporting its Buy rating.<\/p>\n
\n\tShares in Miclyn today are slightly weaker and as at 11.30am the stock was down 2c at $1.60. This compares to a range of $1.49 to $1.95 and implies around 30% upside to the average price target according to the FNArena database of $2.09.<\/p>\n","protected":false},"excerpt":{"rendered":"
After Macquarie and JP Morgan initiated coverage on Miclyn with Buy ratings yesterday, Deutsche Bank has added to the positive view.<\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[6],"tags":[24,37],"acf":[],"_links":{"self":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/56603"}],"collection":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/comments?post=56603"}],"version-history":[{"count":0,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/56603\/revisions"}],"wp:attachment":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media?parent=56603"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/categories?post=56603"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/tags?post=56603"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}