GE Shipping’s (GESCO) standalone Q1FY09 results were largely in line with our estimates. Margins, however, came in higher than anticipated due to a reduction in ship charter expenses as a result of a 49% y-o-y decline in in-charter days to 178.
The company has sold five vessels during the quarter and has placed two new build orders for Suezmax vessels, which will be delivered in the second and third quarters of FY12.
We have reduced our revenue and EBITDA estimates for FY09 and FY10 to reflect the loss of operating days consequent to removal of vessels from the fleet. Net profit, however, stands marginally above our estimates due to gains on the sale of ships.
The stock is currently trading at a P/E of 4.5x, P/BV of 1x and EV/EBITDA of 4.2x on its FY10E. We maintain a BUY recommendation on the stock, with an increased target price of Rs580, which represents a 39% appreciation from current levels.