Nam Cheong Limited 3Q2025 & 9M2025 Financial Results: Analysis and Insights

Nam Cheong Limited, a major player in the Malaysian offshore support vessel (OSV) sector and listed on the Singapore Exchange, has released its unaudited condensed interim results for the third quarter (3Q2025) and nine months ended 30 September 2025 (9M2025). Below, we analyze the key financial metrics, performance drivers, and strategic outlook based strictly on the disclosed financial statements.

Key Financial Metrics and Performance Overview

*Interim quarterly breakdowns not provided in the report.

Nine-Month Summary (9M2025 vs 9M2024)

Performance Drivers and Notable Items

• Revenue: The Group’s revenue fell 12% YoY in 9M2025, largely due to lower vessel utilisation in the chartering division. No revenue was recognized from shipbuilding, as there were no vessel deliveries scheduled during the reported period.
• Profitability: Gross profit and gross margin held at 51%, while net profit plunged 80% YoY. This was mainly due to the absence of one-off gains (notably, a large debt waiver in 2024 amounting to RM393.4 million) and higher litigation settlement expenses in 2025.
• Expenses: Selling and administrative expenses rose by 15% YoY, mainly from increased staff costs. Other operating expenses rose due to litigation settlements.
• Finance Costs: Normalized at RM15.7 million (9M2025), up slightly from RM14.7 million in 2024, reflecting post-restructuring debt levels.
• Cash Flow: Operating cash flow remained positive (RM28.2 million in 9M2025), but overall cash and bank balances declined sharply due to repayments of borrowings and trade payables.
• Dividend: No interim dividend was declared for the period, as management aims to strengthen the balance sheet following recent restructuring.

Exceptional or One-Off Items

• 2024 Debt Restructuring: The previous year’s net profit was inflated by a substantial one-off gain from debt waivers and asset sales related to the 2024 restructuring scheme. Excluding these, core profits have only declined by 12% YoY, in line with the lower revenue.
• Litigation Settlement: 9M2025 saw an uptick in other operating expenses due to a litigation settlement with a third-party supplier.

Balance Sheet and Capital Structure

• Total Assets: Increased by 4% to RM1,329.9 million, driven by investments in property, plant, and equipment and higher inventories (vessels under construction).
• Total Liabilities: Fell by 12% to RM621.8 million, with a 5% reduction in borrowings and a sharp 41% fall in trade and other payables.
• Net Asset Value (NAV): NAV per share rose to 178.7 sen (from 146.1 sen as at end-2024).
• No Share Buybacks or Dividends: No movements in treasury shares or subsidiary holdings, and no dividend payout.

Industry Outlook and Chairman’s Statement

“No dividend has been declared in the period under review as the Company is working through its restructuring arrangement and wishes to enhance the financial strength of the Company.”

“The local OSV market continues to face structural supply constraints. While the existing fleet is ageing, new vessel construction remains subdued, primarily due to banks’ continued caution in extending financing for newbuild programs. Malaysia’s cabotage policies, which limit foreign vessel participation, further restrict available supply. As a result, OSV charter rates are expected to remain well supported in 2026. Equipped with the largest and the most advanced OSV fleet on Malaysian waters, capable of supporting both production and exploration projects, the Group remains cautiously optimistic about its long-term growth prospects and will continue to stay agile in capturing emerging opportunities.”

The Chairman’s tone is cautiously optimistic, emphasizing a focus on financial strengthening, the advantages of the group’s advanced fleet, and supportive industry fundamentals for charter rates going forward.

Historical Trends and Noteworthy Changes

• The 2024 financial year was highly distorted by restructuring gains. 2025 results provide a more normalized base.
• Core profitability remains under pressure from lower utilization, offset by improved cost discipline and the absence of restructuring costs in 2025.
• No evidence of asset revaluation or delays, nor of director remuneration disclosure in this report.
• No significant related-party transactions or unusual fund flows reported.

Risks and Forward-Looking Events

• Potential risks include continued subdued vessel construction, reliance on Malaysian cabotage policies, and sensitivity to oil and gas sector activity.
• No dividend is anticipated in the near term, as balance sheet repair remains a priority.
• Management expects OSV charter rates to remain firm due to limited fleet supply and ongoing demand.

Conclusion and Investment Recommendation

Overall, Nam Cheong Limited’s financial performance for 9M2025 appears neutral to mildly positive in a normalized, post-restructuring environment. Core operating profit fell in line with revenue, but the absence of exceptional restructuring gains means headline profit is sharply down from 2024. The company’s improved balance sheet, lower liabilities, and strengthening OSV market fundamentals provide some reassurance for medium-term resilience, though the lack of dividend and lower earnings may deter income-focused investors.

Investor Recommendations

• If you are currently holding this stock: Consider holding your position if you are comfortable with the company’s balance sheet repair phase and the medium-term recovery potential in OSV charter rates. Near-term earnings and dividends may remain subdued, but a turnaround is possible as industry fundamentals improve.
• If you are not currently holding this stock: This stock may appeal to investors seeking exposure to a potential recovery in the Malaysian OSV sector, but patience will be required. Consider accumulating on weakness if you are a long-term investor and comfortable with the company’s restructuring history and lack of immediate dividends.

Disclaimer: This analysis is based strictly on information disclosed in the company’s latest financial report. It does not constitute financial advice. Investors should consider their own financial situation, risk tolerance, and conduct further due diligence or consult a professional advisor before making investment decisions.

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