Nam Cheong Secures US\$64.5 Million Shipbuilding Contracts in Major Sector Breakthrough

Nam Cheong Limited (SGX: NCL), a leading Offshore Support Vessel (“OSV”) builder based in Sarawak, Malaysia, has announced a significant milestone: the company has clinched US\$64.5 million worth of contracts for the construction of four state-of-the-art OSVs for an established UAE-based global energy maritime logistics company. This marks Nam Cheong’s first newbuild contract win in over a decade, signaling a potential turning point as demand for newbuild OSVs resurges with a strengthening offshore oil & gas market.

Key Highlights of the Deal

• Contract Value: US\$64.5 million for four offshore support vessels.
• Vessel Specifications: Two 60-metre Dive Support Vessels (DSVs) and two 60-metre Remote Operated Landing Crafts (ROLCs).
• Delivery Timeline: All vessels are scheduled for delivery in the second half of 2027 and early 2028.
• Technological Breakthrough: The ROLC is the first-of-its-kind in the world—a fully unmanned, remotely operated vessel controlled via satellite from a shore station, equipped with auto-docking capabilities.
• In-House Construction: All vessels will be fully built at Nam Cheong’s Miri Yard in Sarawak, Malaysia.
• Revenue Impact: The contracts are expected to contribute positively to Nam Cheong’s earnings from FY2026 to FY2028.

Strategic and Market Implications

• This is Nam Cheong’s first shipbuilding contract win since the previous industry downturn, suggesting renewed confidence in its capabilities and a broader recovery in offshore vessel demand.
• The customer’s decision to award these contracts to Nam Cheong highlights the company’s strengthened technical expertise and proven track record over six decades, with more than 150 vessels delivered since 2007.
• The advanced design of these vessels, especially the unmanned ROLC, demonstrates Nam Cheong’s ability to deliver innovative, high-tech solutions to global clients.
• These contracts come at a pivotal time—OPEC+ has announced a further oil output hike for November 2025, the eighth consecutive month of production increases, supporting sustained exploration and production activities worldwide.
• Global oil majors are investing heavily in new mega-projects and acquisitions, underpinning robust long-term demand for newbuild OSVs as the average global fleet ages (15–16 years), approaching a replacement cycle.

Potential Impact on Shareholders and Share Price

• Revenue and Earnings Visibility: The contracts provide strong earnings visibility for Nam Cheong over the next three years, which could positively influence share price expectations.
• Sector Leadership: The company’s ability to secure one of the first major newbuild contracts in years positions it as a sector leader as newbuild demand returns.
• Technical Differentiation: The world’s first unmanned, remotely operated landing craft demonstrates Nam Cheong’s commitment to technological advancement, potentially attracting further contracts and investor interest.
• Growth in Chartering Business: Beyond shipbuilding, Nam Cheong is expanding its vessel chartering operations, currently operating a fleet of 36 vessels, further diversifying revenue streams.

Management Commentary

Mr. Leong Seng Keat, CEO of Nam Cheong:
“We are thrilled to have an established UAE-based global energy maritime logistics company as our new customer for constructing four highly sophisticated OSVs. This marks the beginning of the resurgence in demand for our shipbuilding activities after more than a decade. We are deeply grateful for the customer’s trust and confidence in us and equally proud that our own efforts and continuous upskilling have brought us to this milestone. I am confident that our decades of proven track record in shipbuilding, strengthened technical know-how, and commitment to meeting customers’ requirements will enable us to ride on this positive newbuild momentum and deliver long-term value to our shareholders.”

Company Background

• Established: 1968, originally as a fishing vessel builder.
• Current Focus: OSV chartering, construction, and engineering for global oil and gas exploration and production.
• Geographic Reach: Customers span Malaysia, Southeast Asia, Middle East, West Africa, Latin America, Europe, and the United States.
• Market Position: Malaysia’s largest OSV builder, with one of the largest shipbuilding yards for OSVs in the country.
• SGX Listing: Listed on the Singapore Exchange since May 27, 2011.

Investor Takeaways

This contract win is a potentially price-sensitive development for Nam Cheong. It signifies not only a return to growth in shipbuilding after a long hiatus but also demonstrates the company’s ability to deliver technologically advanced vessels in a recovering market. The deal provides multi-year earnings visibility, strengthens Nam Cheong’s competitive positioning, and could act as a catalyst for further contract wins and share price appreciation, especially as global offshore oil & gas activity continues to rebound.

Disclaimer: This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investors should conduct their own due diligence and consult with professional advisors before making investment decisions. The author does not hold any position in Nam Cheong Limited at the time of writing.

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