FY21 results in line
Maintain BUY and MYR0.16 TP
FY21 results (9x YoY) came in at 95% our FY estimate, on the back of softer QoQ performance, due to seasonal weakness. Our estimates are unchanged, on expectation of a stronger FY22. Our SOP-based TP
(unchanged) equates to 1x PBV, valuing the: (i) JU ops at 0.6x EV/ replacement value (9 sen/shr) and (ii) OSV ops at 0.7x PBV, (7 sen/shr).
4Q21: Weaker QoQ on seasonal weakness
Core net profit of MYR9m (-47% QoQ) in 4Q21 took FY21 core earnings to MYR28m (vs. MYR3m in FY20), 95% of our FY estimate. The QoQ weakness was expected, as seasonal weakness kicked in, resulting in lower utilisation levels for its OSV and drilling ops. We estimate that it averaged a lower OSV utilisation of 60+% in 4Q21 (vs. 90+% in 3Q21; based on 21 units; 13 AHTS, 3AWBs, 2 PSVs, 2 AHTs and 1 SSV). Meanwhile, its JU ops were relatively flat QoQ (revenue: MYR28m).
Turning around, as per expectation
Its earnings recovery is tracking to expectation. Our earnings estimates are unchanged in FY22. We expect a sequentially weaker 1Q22 but a stronger 2Q22 outlook, as the drilling ops commences ConocoPhillips’
short-term charter (3-4 months; 3+1 wells in Sarawak). Its drilling ops will continue to be Icon’s key earnings driver this FY, generating net profit of USD6m-8m p.a. in FY22-23, based on the following assumptions: (i) 80% utilisation level (300 days), (ii) DCR of USD70k and (iii) all-in daily cost (opex, depreciation, interest costs) of USD35k-USD40k. We also expect OSV earnings to be in the black, with a sustained utilization of 62% and DCR (MYR30.4k) in 2022 (break-even: 60%).
Maintaining high utilisation is key
Securing charter extension for its assets (JU and OSVs) remains its key KPI, followed by continued cost optimisation exercise, which include disposal of ageing/ idle OSV assets. Meanwhile, Icon filed a winding-up petition against Sapura Offshore S/B due to the latter’s failure to settle MYR3.6m owed to Icon.