Results Update

Maybulk has just announced its results for FYE31/12/2009. For QE31/12/2009, Maybulk'a net profit increased by 27% q-o-q or 26-fold to RM88.4 million while turnover dropped by 15.7% q-o-q or 40.2% y-o-y to RM82.6 million.

This is a fairly good set of results, which reflects the strong contribution from its associates (of RM97 million for FYE31/12/2009 as compared to RM21 million previously), such as PACC Offshore Services Holdings Group ('POSH') as well as Eminence Bulk Carriers Pte Ltd & Novel Bright Assets Ltd, owners of bulk carriers Alam Penting (GT 46982) & Alam Murni (GT 29979). Its investment in POSH allows Maybulk to have a small foothold in a burgeoning Oil & Gas industry sector, which helped to cushion the drop in shipping rates (see Chart 2). As a result of the contribution from the above associates, Maybulk's bottom-line staged a steady recovery in the past 3 quarters (see Chart 1).


Table 1: Maybulk's 8 quarterly results


Chart 1: Maybulk's 27 quarterly results


Chart 2: Baltic Drybulk Rates' daily chart as at Feb 22, 2010 (Source: Investment.tools.com)

Valuation

Maybulk (at RM3.12 as at 4.00pm) has a PER of 13 times (based on its EPS for FYE31/12/2009 of 24 sen). At this multiple, I believe Maybulk's upside is quite limited (say, 10%). However, the Kuok group's DNA may shine through again for this company. With that, I think Maybulk deserves a HOLD rating for now.

Technical Outlook

Maybulk is likely to move sideway within a range of RM3.00 & RM3.40.


Chart 3: Maybulk's weekly chart as at Feb 22, 2010 (Source: Quickcharts)

Conclusion

Based on adequately satisfactory financial results, Maybulk should remain a stock to watch. Upside is however limited as I expect a range bound trading for this stock, between RM3.00 & RM3.40.