This offshore company has no immediate debt issues, so why are analysts holding back?

SINGAPORE (Nov 10): DBS Group Research is maintaining its “hold” rating on PACC Offshore Services Holdings and target price of 33 cents, even as the brokerage considers the offshore company a “more stable long term bet versus peers”, thanks to lack of immediate debt concerns and positive operating cashflows over the past nine months.

DBS analyst Suvro Sarkar notes that the group’s undrawn bank lines of US$365 million ($510 million) are more than sufficient to cover its outstanding committed capital expenditure of US$151 million.

Sarkar also explained that the forecast US$150 million additional asset impairment by year end would raise POSH’s net gearing to 0.7 times from the current 0.6 times, but would still be more manageable than its peers. The group is also unencumbered by outstanding bonds, posts positive cash flows, and has an extended term loan profile of five to seven year maturities.

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