Samudera - Turns around with 2Q earnings of $4.0m

	2Q03  (S$m)	2Q02  (S$m)	YOY chg  (%)
Turnover	126.3	125.0	+1.0
Pre tax profit	4.1	-0.8	NM
Net profit	4.0	-1.0	NM
EPS (¢)	0.88	-0.23
NTA (¢)	43.58	41.88@ Dec02
DPS (¢)	-	-

The establishment of Silkargo LLC in Dubai and Galaxy Shipping Services in Malaysia during 1Q03 led to the higher revenue. In addition, the deployment of additional ships by Industrial Shipping during 1Q03 also contributed to the increase in the Group's revenue. However, this was partially offset by decrease in Container Shipping revenue due to deterioration of freight. Gross profit improved by 72% to $9.8m. Coupled with a reduction in forex loss of $0.23m vs $2.5m in the previous period, the group recorded net profit of $4.0m.

Outlook : Container Shipping will continue to face a challenging business environment. The charter hire rate is increasing and bunker price remains uncertain. In 2H03, Industrial Shipping will increase its fleet with the delivery of 3 units of coal carriers and 1 unit of chemical tanker designed for transportation of coal and methanol respectively. These acquisitions together with the 5 vessels acquired earlier this year are expected to provide positive contribution to the Group. The Logistics and Others business is expected to grow in 2H03 due to the commencement of operation of a jv company, PT. Jardine Tangguh Transport Services, in June 2003.

GKG's view : Samudera's results were in line with expectations; the interim net profit of S$9m works out about 40% of our full year forecast. We are expecting a better second half with more projects from industrial shipping leading the growth, as well as better freight rates and higher volume from container shipping. While the PSA Anniversary Rebate expired on 30th June, the increase in freight rates effective 1 July will help offset higher stevedoring costs. No change to our full year net profit estimate of $22.8m or 5cts EPS (+80% yoy), as well as FY04 forecast of $27m net profit and 6cts (+20% yoy) EPS. While Samudera's share price has risen 47% since our report dated 4 July 2003, we believe there is still more upside. We will be pitching our target price based on 1x FY04 book value and will thus be raising our target value of 45cts.