Indonesian Companies in Focus: Logindo Samudramakmur
After declining below the USD $30 per barrel level in February 2016, crude oil prices have shown a rising trend, touching the USD $50 per barrel level. One of the companies that hopes this rising trend will continue is Indonesian company Logindo Samudramakmur, a company that provides offshore support vessels for oil & gas exploration. However, when oil prices are low, oil and gas exploration is limited. Moreover, existing clients request for lower prices of Logindo Samudramakmur's services.
As a result, Logindo Samudramakmur's revenue fell 31.7 percent (y/y) to USD $47.1 million in 2015. The company's net profit plunged a whopping 99.8 percent (y/y) to USD $49,293 over the same period. This decline occurred as the utilization rate of Logindo Samudramakmur's vessels fell from 71 percent to 51 percent. The company operates 61 offshore support vessels (comprising 12 vessel types).
In the first quarter of 2016 the company's corporate earnings remained bleak. Logindo Samudramakmur's revenue fell another 23 percent (y/y) to USD $10.5 million. Meanwhile, it posted a net loss of USD $1.49 million in Q1-2016, down from net profit worth USD $3.55 million in Q1-2015.
The performance of Logindo Samudramakmur depends heavily on the crude oil price. If the oil price rises, then earnings of Logindo Samudramakmur rise accordingly. So the real question is, where will the oil price go? This is a rather tough question to answer and puzzles all analysts.
Oil prices climbed almost 90 percent between January and May, a remarkable recovery from the 13-year lows at the year-start. However, the current oil price level - near USD $50 per barrel - is still not enough for companies such as Logindo Samudramakmur to make a good living (a level above USD $65 per barrel would be a more realistic one that starts to attract some more oil and gas exploration). Factors that currently support a higher oil price are the world economy that is showing some signs of improvement and the fact that US shale gas production is in decline because it requires higher prices to be economically viable.
Crude Oil Price:
A real boost would be given to crude oil prices if the the Organization of Petroleum Exporting Countries (OPEC) agrees to cap its oil production. However, at the year-start talks about an oil freeze collapsed as Iran is not interested to join such a freeze. At the coming OPEC meeting, this Thursday, it is highly doubtful such an agreement will be reached. In fact, the OPEC stated that oil prices have made a good recovery and are heading in the right direction. Thus, an oil freeze agreement seems impossible. Therefore, it is likely that oil - similar to the world economy - is stuck in a low growth trap in the foreseeable future. This implies that Logindo Samudramakmur is also stuck in this trap and will most likely not be investors' darling this year.
Logindo Samudramakmur's Financial Highlights:
| 2011 | 2012 | 2013 | 2014 | 2015 | 2016F | 2017F | |
| Net Sales | 25.5 | 34.1 | 59.0 | 69.0 | 47.1 | 42.4 | 44.5 |
| Gross Profit | 12.4 | 16.6 | 30.1 | 32.5 | 13.6 | 12.4 | 13.5 |
| Net Income | 3.7 | 8.9 | 16.5 | 20.0 | 0.49 | (1.00) | 0.16 |
| Income before Tax (loss) |
4.1 | 9.4 | 17.5 | 21.4 | 0.6 | (1) | 0.2 |
| EBITDA | 33.0 | 40.9 | 18.4 | ||||
| Total Assets | 100.0 | 148.4 | 235.7 | 262.1 | 267.2 | 253.8 | 250.2 |
| Total Liabilities | 58.1 | 97.7 | 123.7 | 131.7 | 140.3 | 87.2 | 83.4 |
| Earnings per Share¹ |
68 | 162 | 87 | 105 | 0 | (5) | 1 |
| PBV (x) | 17.3 | 6.3 | 8.1 | 6.1 | 0.19 | 0.21 | 0.21 |
in million US dollar unless otherwise stated
¹ in US dollar
Source: Logindo Samudramakmur Annual Report 2015 & Pefindo (26/04/2016)
On Wednesday morning (01/06), Brent crude oil fell 1.7 percent to USD $49.05 per barrel, while US benchmark West Texas Intermediate was down 1.6 percent to USD $48.32 a barrel, declining further away from the psychological threshold of USD $50 per barrel.
With no real light at the end of the tunnel yet, Logindo Samudramakmur is planning to sell 19 tug boats with a combined value of approximately USD $15 million. This is part of the company's strategy to become more efficient (maintenance costs for the ships are expensive) and boost the utilization ratio for its vessels. The company also wants to diversify its business by expanding into sea sand dredging, supporting services for port activities, and the transportation of liquefied natural gas.
Today (01/06) shares of Logindo Samudramakmur fell 1.92 percent to IDR 153 a piece in line with today's declining oil prices. So far this year, however, the company's shares have gained 12.50 percent due to the rebounding oil prices.
Stock Quote Logindo Samudramakmur - LEAD:
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