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SKG [BUY +49.4%] - Earnings poised to improve on new routes and fleet expansion - Update

We reiterate our BUY rating on SKG with a total stock return of 49.4%. We increase our target price by 4% as we take into account the contribution from new Roro ferries on the Ha Tien – Phu Quoc route, resulting in a 6% increase in our 2018F NPAT. H1 2017 revenue grew 6% YoY driven by two new speedboats, while NPAT fell 11% due to lower occupancy in the key Rach Gia – Phu Quoc route amid market share loss and fuel price hikes. The Soc Trang – Con Dao route and a Roro ferry