Can POSH survive the turbulent offshore asset market in 2016?

Its balance sheet position is key.

Tough times are on the horizon for PACC Offshore and Marine (POSH), but analysts are upbeat that POSH will be able to weather the storm.

According to a report by DBS, the weak offshore asset environment will likely persist. Given this, DBS estimates net income of about US$11m and US$22m in FY16 and FY17 respectively, which translates to ROE of 1-2%.

Further, uncertainty remains around POSH’s accommodation segment. Despite the first SSAV bagging a one-year renewal of its contract, a lower charter rate could pull gross profits from the segment by as much as US$3m-4m per quarter from 2Q16.

The second SSAV’s fate is still unknown as well, as no firm deal has been announced yet. DBS estimates that going uncontracted could further shave off US$13m off POSH’s FY17 gross profit.

DBS waves off jitters, though. This is due largely to POSH’s balance sheet position, as it has exhibited the ability to maintain utilisation at relatively high levels. In addition, POSH has recently undergone initiatives to penetrate the Middle East market.

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