Broker: Maybank Investment Bank Berhad
Date of Report: June 1, 2025

Lianson Fleet Group: Navigating Uncertain Waters in Malaysia’s Oil & Gas Sector – Full 2025 Analysis

Overview: Lianson Fleet Group’s Performance and Outlook

Lianson Fleet Group (LFG MK), one of Malaysia’s largest Offshore Support Vessel (OSV) operators, has released its 1Q25 results, which landed within expectations. The report, prepared by Maybank Investment Bank, outlines the key financial and operational trends impacting Lianson and the broader Malaysian oil and gas (O&G) sector for 2025 and beyond. The company’s performance is set against a backdrop of shifting industry dynamics, including reduced offshore activity and evolving capital expenditure by oil majors such as PETRONAS.

Key Highlights and Investment Call

• Current Share Price: MYR 0.79
• Target Price (TP): MYR 0.74 (down from previous MYR 1.09)
• Investment Rating: HOLD
• Market Capitalization: MYR 675.3M (USD 159M)
• Issued Shares: 855 million
• 52-week High/Low: MYR 1.31 / 0.70
• Major Shareholders: Liannex Corporation (S) Pte Ltd. (43.8%), Hallmark Odyssey Sdn Bhd (3.9%), BIN HASHIM HADIAN (2.9%)

1Q25 Results: Seasonally Slow Start, But In Line

Lianson’s first quarter of 2025 reflected the typical seasonal weakness seen in 1Q and 4Q due to monsoon impacts. Key figures include:

• 1Q25 Core Net Profit: MYR 11.6 million (down 35% QoQ, compared to -MYR 21.3 million in 1Q24)
• Utilisation Rate: 51% (vs. 50% in 1Q24)
• Revenue: MYR 57.3 million (up 87% YoY, down 26% QoQ)
• Gross Profit Margin: 34.6%
• Core Net Profit Margin: 20.3%

The quarter’s performance represented 17% of full-year internal estimates.

Results Summary Table

Industry Headwinds: Lower Offshore Activities Ahead

The Malaysian O&G sector is likely to face 2025 with a reduction in offshore activities, tied closely to expectations of a lower PETRONAS capex spend. The report’s channel checks indicate:

• Industry-wide slowdown in 2025 due to softer spending by oil majors.
• Lianson’s utilisation rate assumption for FY25-27E is trimmed to 70% (from 75%).
• Fleet size has increased to 22 OSVs (from 19), partially offsetting lower utilisation.
• Daily Charter Rates (DCRs) are expected to remain high due to tight vessel supply and limited newbuilds, as financing remains a hurdle for new entrants.

Earnings Revision and Financial Guidance

Despite a larger fleet, the outlook is tempered by lower expected utilisation. However, the earnings forecast has been lifted based on the increased vessel count:

Earnings Revision Table

Valuation: Target Price Adjustment and Peer Comparison

• The target price is lowered to MYR 0.74, based on 7x FY26E PER (-1SD of historical 7-year mean).
• The peer proxy used is Dayang Enterprise (DEHB MK), as other sector names faced earnings volatility and corporate restructuring that muddle historical comparisons.
• During the previous upcycle (2009-2014), Dayang’s 1-year forward PER ranged from 3.9x to 16.4x, with the -1SD at 7x. This is used for Lianson’s valuation as the sector’s supercycle appears over, and capex cutbacks may reduce OSV demand.

Key Risks to Watch

• Volatility in crude oil prices.
• Potential inability to secure contracts, leading to lower utilisation.
• Challenges in locking in higher DCRs for future jobs.

Comprehensive Financials: Lianson Fleet Group at a Glance

Profit & Loss Highlights (MYR million, FYE Dec)

Growth and Profitability Ratios

• Revenue growth (FY24A to FY25E): 37.1%
• EBITDA margin (FY25E): 60.0%
• Pretax profit margin (FY25E): 34.4%
• Net profit margin (FY25E): 25.2%
• Net gearing (FY25E): 8.7% (expected to move to net cash position in FY26E and FY27E)

Lianson’s Competitive Position and Sector Dynamics

• Lianson Fleet Group remains a leading OSV operator by fleet size in Malaysia.
• The company is expected to weather the 2025 offshore activity slowdown better than some peers due to its operational improvements and increased fleet size.
• However, the lack of strong sector drivers and a likely end to the industry supercycle cap upside potential.
• Management under new leadership is anticipated to continue operational enhancements.

Conclusion: HOLD Rating Reflects Balanced Risk and Opportunity

Lianson Fleet Group’s prospects for 2025 are shaped by a cautious sector outlook, mitigated by the company’s expanded fleet and operational improvements. While the earnings outlook has been upgraded based on a larger asset base, reduced utilisation rates and muted sector growth cap the upside. Investors are advised to maintain a HOLD stance, with a revised target price of MYR 0.74, reflecting a prudent approach amid industry headwinds.

Contact Details

For further information, contact Maybank Investment Bank Berhad at 33rd Floor, Menara Maybank, 100 Jalan Tun Perak, 50050 Kuala Lumpur, Tel: (603) 2059 1888.