Posted by: donmihaihai | June 15, 2009

Alice in “Offshore-land”

Long term contracts? Increasing market share? lucrative deep sea segment?

Demand > supply in the Offshore support industry is well known for years( Since 2001/02, 2009 is the no. 7th year since I heard of it ) but that doesn’t mean it is time for fairy tale.

The reality is all listed players here are tiny back then(exclude KeppelFel and SembMarine). That include Jaya and 2 local players bought by DryDock World. Other are not listed or yet to join in the fun.

Anytime, there will be another “Ezion” popping up — just like the latest Bee Mar LLC with its state of art new-build vessels. And wonder why biggest players like Tidewater and Seacor had a fleet of vessel with average age at over 20 years in 2006(from 2006 wrap up by marcon.com)?

Ponder why… the answer is obvious.

Lastly with every segment of shipping in over supply situation, the where is the honey pot?

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Responses

  1. it looks like jaya could be facing some refinancing problems. i would have thought jaya, with a stronger bs wouldn’t be in this situation and expected this coming from ezra or swiber instead. what’s yr take on this? the price is battered, is this a good chance to lower my buying cost?

  2. jaya is facing some refinancing problems.
    i remember asking u some time ago what proportion of ships they built have a confirmed contract with buyers, and u said u dunno. i think u should find out.

    and it looks like they couldn’t even dispose of their assets at a reasonable price. i would think that the cost that they incur to built their ships were too high, and they can’t get a good price to recoup their investments.

  3. Hi John,

    I have stop buying Jaya and unlikely to buy any offshore company once the sharp drop in demand for all other type of shipping and crude oil make offshore segment a honey pot with cracks. But well price is always a big part of any buy/sell decision.

    Simis,

    Why should I find out when I know there is nothing much to find and Jaya business model and industry usual norm doesn’t support that.

    I am thinking on that way too i.e cost of building is too high. But so far all numbers and actions i see doesn’t weight heavily on this yet. If anything, it weight heavily on the other side.

    While disposal slow down on 3Q and likely 4Q, Jaya is still going to end up with lesser vessel of about 24 with a 1982 Java Adventurer sold recently and a number being sold in 1H2009. That is of course without counting on new completed vessel from their shipyards.

    That say unless the number for next 2 or 3 quarter changes sharply, I am not too worried. Jaya is unlike Beauty China even thou both are in somehow same situation as it is support by hard assets which I know being understated in the book and even in desperate situation, partial liquidation will save Jaya. Chances are, they are working toward that way as well.


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