Aussie shipbuilder rules the waves

THE star attraction for visitors being shown around the cavernous Oceanfast boat shed out at Henderson is the three quarters completed 69.5-metre yacht Aussie Rules being built for golfer/businessman Greg Norman.

Due to be launched in July, the vessel will be the biggest privately owned aluminium motor yacht in the world. But she will be no floating gin palace. This is an expedition class ship with the ability to sail from pole to pole without refuelling. The 10 gas tanks together hold a total of 225,000 litres, so she will be expensive to fill up. Norman can afford it. Clearly he will be using his new toy for something more ambitious than chipping golf balls off the stern.

Austal Ships, which took over its neighbour Oceanfast two years ago, naturally will not disclose the price tag for Aussie Rules. There has been speculation that the ‘Great White Shark’ will be signing a check for up to $60 million. While the order represents valuable publicity for Austal, the company builds much more than yachts for the sporting gentry.

The stock market dictum “turn around situations rarely turn around” is unlikely to apply to Austal, which now appears to be surfing the crest of a new wave.

The company ran into heavy water when the order book all but dried up two years ago.

That disappointed the stock market and the share price, which had peaked at $2.47, sank to a low of 86 cents.

A change of course was set by managing director Bob McKinnon, whose previous job at Capral Aluminium included selling raw material to the group. The important ferries division is now firing on all cylinders. The Austal yards have work in hand worth more than $350 million for 16 new vessels and are firmly on the comeback trail.

The company can count the US Marines, the New World ferry company in Hong Kong and tourist operators from Venezuela to Egypt among its clients. Last year Austal built a 101-metre catamaran ferry on spec – known in the trade as a stock boat. Now named the “The Westpac Express”, it was leased at $US3.75 million to the US Marines for four months. The military liked the ability to load a battalion of 950 Marines, and up to 550 tons of vehicles, and whisk them off at 36 knots from their base in Okinawa. The Marines have renewed their lease, which is eminently bankable. That should enable Austal to sell the vessel to a financial institution.

The New World First Ferry in Hong Kong has signed a contract for three 47.5-metre catamarans with the capacity to carry 425 passengers on the run across the Pearl River estuary to Macau, and it has taken options over four more. There are high hopes that these orders will help Austal re-enter the Hong Kong market, where it sold 29 vessels in the 1990s. The optimism may be justified. The 40-year monopoly on Macau casinos held by octogenarian gambling tsar Stanley Ho recently ended. China has taken over the former Portugese colony and is evaluating bids from 21 consortiums for new casino licences.

Apart from Hong Kong bidders, there is keen interest from Genting International in Malaysia and US groups like Sun Entertainment and MGM Mirage from Las Vegas.

These players have billions to invest in hotels and resorts in Macau. Annual visitor numbers of 10 million are expected to double in a matter of years, which means a lot more ferries will be needed on the route.

However, what may be the company maker for Austal is its foray into the US shipbuilding market. Under the old established Jones Act, only vessels constructed in the US can ply local waters. Mr McKinnon hurdled that problem by buying 70 per cent of the Bender shipyard in Mobil, Alabama. He confidently expects the US unit to eventually grow as big as its Western Australian parent. The venture has already won an order for two supply ships from a Louisiana offshore oil operator.

Austal shares have been re-rated in recent weeks, moving up to $1.30, where they are selling at a modest nine times forecast profits of $28 million for the current year. There should be more buoyant times ahead.

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