COCO’s 1H13 net profit of MYR63.1m was in line with our but  slightly below  consensus  full-year  estimates.  Despite  lower  1H13  revenue,  its overall  profitability  improved  due  to  higher  margins  from  its shipbuilding  business.  Maintain  BUY,  as  we  believe  COCO  stands  a good  chance  of  securing  its  maiden  jack-up  rig  contract,  which  will prompt a higher valuation. We retain our FV at MYR3.00.  

- In line. COCO’s 1H13 net profit of MYR63.1m (+3.0% q-o-q, +5.8% y-o-y) was in line with our but slightly below consensus forecasts, accounting for  49.3%  of  our  and  46.8%  of  consensus  full-year  estimates.  Despite lower  1H13  revenue  (-15.3%  q-o-q,  -20.7%  y-o-y),  overall  profitability improved due to better margins from its shipbuilding division.  

- Declares  first  interim  dividend.  COCO  declared  its  first  interim dividend of 3.0 sen per share for FY13, representing half of our full-year estimate. Given that the company has paid out dividends in two tranches historically, we retain our dividend forecast and believe shareholders can look forward to another 3.0 sen per share towards year-end.

- Catalyst  lies  in  its  maiden  venture.  We  believe  that  the  company stands a good chance of securing its maiden jack-up rig contract, which will  prompt  a  higher  valuation.  This  is  based  on  our  view  that  locally-owned  jack-up  rigs  are  likely  to  be  chartered  in  the  upcoming  renewal cycle.

- Maintain  BUY.  We  currently  value  COCO  at  MYR3.00,  pegged  to  10x FY14 EPS, at a 25% premium to its historical mean of 8x, but below its historical  high  of  19x.  However,  with  a  potential  jack-up  rig  contract  in hand,  we  believe  this  could  easily  re-rate  towards  13-14x  forward earnings, in line with the other offshore asset owners. Maintain BUY. 

Source: RHB