Bhagwan Marine’s order book is looking strong as it hits the bourse with a bang

Bhagwan Marine says it will beat its prospectus profit forecast and its tendering team is busier than ever, as it makes its debut as a public company.

Bhagwan Marine is one of Australia's leading offshore vessel operators.

Bhagwan Marine will deliver a better than expected net profit later this month, after debuting at a premium on the ASX on Tuesday.

The company’s shares traded as high as 68c just after hitting the boards at noon eastern time, compared with the initial public offer price of 63c.

The offshore marine operator’s executive director - finance Andrew Wackett said on Tuesday that the Western Australian company would beat its prospectus profit forecast, delivering $39.5m-$40.5m for the past financial year, up 2-4 per cent on what its prospectus had forecast.

Bhagwan raised $80m at 63c per share, with the money to be used to pay down $44.5m in bank loans and $24.6m in shareholder loans, as well as to strengthen the company’s balance sheet to pursue growth opportunities.

Managing director Loui Kannikoski said the company’s bidding team was busier than it had ever been, tendering on projects with a time frame out to 2028, and he saw plenty of growth in the offshore renewables sector.

Bhagwan, founded by the Kannikoski family in Geraldton, WA, in 2000, runs a fleet of 96 vessels, making it one of the largest offshore operators in Australia.

The company started with one vessel and has made a series of acquisitions over the past decade or so. It now has operations across Australia and flagged in its prospectus that it is on the hunt for more potential deals.

The listing follows the $1.1bn takeover of MMA Offshore which closed in recent days, with Singapore’s Cyan Renewables buying that company for $2.70 per share.

The Kannikoski family will hold 40.4 per cent of Bhagwan Marine post-listing, and bought about half a million extra shares in the offer, while chairman Anthony Wooles will hold 8.5 per cent.

New shareholders joining through the IPO will hold 45.6 per cent.

Bhagwan is targeting a dividend payout ratio of 20 to 40 per cent of free cash flow at the discretion of the board, with net revenue expected to increase from $169m to $264.8m for the past financial year and net profit to fall from $20.4m to $10.4m, with the previous year inflated by a $7.3m tax benefit.

Mr Kannikoski will stay in his role as managing director on a salary of $524,000, while his wife Kerrren is general manager corporate services on $278,000 and son Tom is general manager - corporate and strategic development on $238,000.

At the 63c offer price Bhagwan’s market capitalisation is $173.4m and the company has net debt of $17.9m, and a price to earnings ratio of 16.7.

Originally published as Bhagwan Marine’s order book is looking strong as it hits the bourse with a bang