Maybulk's FY11 core earnings of RM103.4m were 18% below ourestimates but within consensus, with revenue in line.  The lower profit was in tandem with the lower  time charter earnings (TCE) at its  dry bulk division on the back of high bunkeringcosts. In view of the lower rates for Panamaxes, we expect revenue to drop14.7% in FY12. We maintain our revenue forecast but cut our FY12 and FY13 earnings  numbers by 13% and 7% on  persistent  pressure on  bunker fuel.  We maintain our SELL call, but at  higher fair value of RM1.60,  premised on  a 0.85x FY12 P/B,  due to the lower  estimated  dividend (down from 8 sen to 3 sen for FY12).

Below. Save forthe net exceptional loss of RM12m for FY11, Maybulk's core earnings of RM103.4m(y-o-y:  -52%) were below our estimatesby 18% but within consensus on the back of revenue of RM265.3m (y-o-y: -37%y-o-y), which were in line. In view of the lower earnings, the dividenddeclared was lower at 3 sen vs 10 sen in FY10.

Lower rates drag downearnings. The lower profitability was in tandem with the lower TCE (FY:USD16.5k/day, y-o-y:  -36%) recorded byits dry bulk division owing to higher bunkering costs. Although its tankers'TCE was marginally higher by 2% at USD12.3k/day, the docking of its 3 producttankers caused its revenue to dive 24% y-o-y while revenue from the bulk sidesank 39%. Despite the lower profits, MBC still recorded better rates across itsfleet compared to its average peers due to its ability to lock in higher TCEsearlier. Its asset utilization remained healthy at 97.5% (vs 98.4% in FY10).

Outlook stillbleak,  cutting  earnings. We expect slightly lower ratesin 2012 on the Panamax side, while the Handymax and the Handysize segments willsee TCE stabilize. However, as 48% of MBC's total dwt comprises Panamaxes, westill expect revenue to decline by 14.7% y-o-y (revenue is maintained for FY12and FY13). Meanwhile, its average capacity in dwt is expected to grow 9% in2012 (with 3 vessels to be delivered this FY ' one in Jan and the remaining 2in April and Oct) with hiring days growing by the same quantum. Due tooversupply concerns and potential risk of further downside in asset value, theincoming capacity for the next 2 years will be on a charter basis, but withpurchase options. Earnings-wise, management expects to be profitable in FY12.In view of the continued pressure from high bunker fuel, we trim our earningsforecasts for FY12 and FY13 by 13% and 7% respectively. The offshore vesselsector is seeing better vessel utilization although rates are still lagging. Weexpect better numbers from POSH.

Maintain SELL. Wemaintain our SELL call, with a higher FV of RM1.60 (premised on a 0.85x FY12P/B), due to the lower dividends (reduced from 8 sen to 3 sen for FY12).