RCS - Ocean Wilsons Hldgs - OceanWilson: Hit by markets,valuation eye-catching

Ocean Wilsons HoldingsAnnouncement

08/09/2022 07:00

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RNS Number : 6638Y  Ocean Wilsons Holdings Ltd  08 September 2022

London, UK, 8 September 2022

 

Ocean Wilson Holdings (OCN): Hit by markets, valuation eye-catching

Ocean Wilsons (OCN) reported a H122 loss of $34.7m (H121 profit of $39.5m),
chiefly due to weak financial markets which led OCN's international investment
portfolio (OWIL) to report a $48.9m loss. Despite headwinds in the container
terminal business, some good operating trends allowed Wilson Sons (PORT3) to
boost OCN's H122 revenue by 12% y-o-y and EBITDA by 2%. We are cutting our
forecasts for FY22e (to a $14.8m net loss) and FY23e (22% EPS reduction). OCN
is trading at 50% of the look-through value of its 56.5% PORT3 stake and OWIL
portfolio. This discount seems excessive, especially as PORT3's market
valuation is undemanding. To further highlight this valuation gap, we have
introduced a valuation range for PORT3; at the mid-point of the range OCN's
discount increases to 59%. OCN has a 6.8% dividend yield.

We are introducing a valuation range for PORT3 based on a FY22 EV/EBITDA ratio
of 7-8x (it is trading on 6.0x on our numbers), which we think is reasonable
given where its peers are trading. The mid-point of this range is 37% above
the PORT3 trading price (BRL9.10 per share) and increases the look-through
discount to 59%. The value of the OCN stake in PORT3 by itself is currently
20% more than OCN's market cap. At the mid-point of the PORT3 range this would
rise to 65%.

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