Thursday, 12 June 2014

Vallianz - Request for Trading Halt after 7% spike in price

Vallianz announced for trading halt at 15:54h today after more than 7% increase in its share price from 0.147 to 0.157, pending release of announcement.

More positive news arriving in the form of contract wins or venture into new segment?

We shall see?

Please also find an updated report last week - Vallianz Holdings – Years of dramatic fleet expansion ahead  

Take note of the following from the report.

Partnership with Chinese State Owned Enterprise yard allow essentially zero down payments and de-risked fleet expansion for up to 200 vessels

MOU with an undisclosed ‘first class’ Chinese shipyard, whereby Vallianz will provide the yard with market intelligence in exchange for the right of first refusal for up to 200 OSVs over the next four to five years. Vallianz will advise the yard on the type and timing of OSVs to be built. The yard will begin building vessels according to Vallianz’s guidance however Vallianz will not be required to enter into any contractual obligation to purchase the vessels and hence will also not be required to place any down payment. Vallianz will however enjoy the right of first refusal for vessels at completion.

Potential 2014 - 2016 earnings and market valuation

Based on Vallianz’s current 24-vessel planned fleet expansion, the company could potentially generate about US$19.6m (Up 90% from US$10.3m) of net profit in 2014, US$36m in 2015, and US$58m in 2016. These numbers don’t include any of the 200 ROFR Chinese vessels being added.

Compared to the company’s ~US$245m market capitalization this implies the company is trading on about 12.5x 2014 earnings, 6.8x 2015 earnings, and 4.2x 2016 earnings. However, this calculation does NOT include the potential for issuance of additional shares either via new events or conversion of existing share options. We believe its likely Vallianz could require additional equity capital to support its current 24 vessel expansion.

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