DBS cuts ASL

DBS Group has downgraded ASL Marine to ‘hold’ from a ‘buy’ citing “limited upside to the current share price”.

DBS sees limited upside to ASL Marine's share price

“For shipbuilding management revealed an improvement in enquiry levels, especially for smaller vessels and offshore construction vessels,” he wrote.

“However, they remain cautious in accepting new contracts as customers are generally demanding more flexible payment terms given the still tight credit market.”

Thia also highlighted the fact that ASL’s repair business continued to experience “lower average job values” as less critical jobs are deferred.

However, he said this may be mitigated by a 70% increase in ASL’s repair capacity which is expected to come on stream over the next six months.

Despite the downgrade Thia has raised his 12-month target price for the stock to SGD1.11 ($0.77) from the previous recommendation of SGD0.94.

In contrast DMG & Partners analyst Serene Lim was decidedly upbeat on ASL Marine and has maintained her ‘buy’ recommendation.

“We were pleasantly surprised by management’s optimism about the business outlook, especially for FY11 and beyond,” she wrote.

“This was a change of view from the previous guidance three months ago,” added Lim.

As such Lim has revised her FY10 and FY11 orderbook assumptions from SGD150m to SGD250m and SGD300m respectively.

She has also upgraded her 12-month target price for ASL to SGD1.41 per share from SGD1.07 previously.

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